Annual Report 2004 2004... · 2005-09-29 · Annual Report 2004. 2004 Corporate ... Datuk Megat Zaharuddin bin Megat Mohd Nor; and Resolution 6 (ii) Md Agil bin Mohd Natt Resolution

Corporate Information 9

Financial Highlights 20

Letter to Shareholders 28

Statement on Corporate Governance 38

Operations Review 60

Financial Statements 149

Annual Report 2004

0420Corporate

Become the leading financial solutions provider committed to meeting andexceeding customer expectations in the target markets and countries we serve.

R e p o r t

A n n u a l

Vision

CoreWe serve our customers by:• Enriching their experiences with us

• Developing long term and mutually beneficial

relationships with them

• Placing a high value on their privacy and

financial security

We value our people who are:• Committed to excellence in everything they do

• Team players working together based on

mutual respect, leadership by example and

dignity in their dealings with everyone

• Ethical and uphold high levels of integrity

We are known as anorganisation that:• Consistently provides our shareholders

with superior returns

• Focuses on sustainable and superior growth

guided by sound financial discipline

• Operates in the most efficient and effective

manner

Values

C o n t e n t s

Operations Review

Page

60

4 notice of annual general meeting9 corporate information

10 profile of directors16 management20 financial highlights22 segment information26 5-year group financial summary27 financial calendar28 letter to shareholders38 statement on corporate governance46 code of ethics and conduct47 statement on internal control50 board committees56 audit committee of the board

Flexibility Creates Innovation

44thannual generalmeeting

<< Bahasa Malaysia

When there is flexibility, there is more

convenience. As a result, more

innovative methods can be developed,

which leads to greater productivity

and profitability. Our diversified

portfolio and wide choice of service

channels reflect our commitment to

giving our customers more options,

which further enhances our reputation

as the nation’s leading financial

solutions provider.

The spring on our cover reflects our

flexibility and commitment to

innovation, which is embodied in the

many firsts we have achieved – from

the varied electronic channels which

include our award winning internet

banking and enterprise cash

management portals, to a

comprehensive range of products that

are designed to meet the ever-

changing needs of our customers.

138 management’s discussion & analysis of financial performance148 statement of directors’ responsibility in respect of the

audited financial statements149 financial statements309 corporate structure310 organisation structure312 Maybank group global network314 group directory316 analysis of shareholdings318 classification of shareholders319 changes in share capital321 Maybank share price review322 properties owned by Maybank group

form of proxy

60 operations review62 household financial services68 enterprise financial services72 investment banking74 insurance78 fund management82 venture capital84 international business86 islamic financial services88 risk management

104 human resource108 community relations

118 Maybank group awards121 group corporate highlights

venue:Nirwana Ballroom, Mutiara Hotel, Jalan Sultan Ismail, Kuala Lumpur

date:11 October 2004,Monday

time:11.30 a.m.

Letter to Shareholders28Page

C o n t e n t s

44thNOTICE IS HEREBY GIVEN THAT the 44th Annual General Meeting (AGM) of

the Shareholders of Malayan Banking Berhad (3813-K) (Maybank) will be held

at Nirwana Ballroom, Mutiara Hotel, Jalan Sultan Ismail, Kuala Lumpur on

Monday, 11 October 2004 at 11.30 a.m. for the purpose of transacting the

following Business:-

annual general meeting

Noticeof Annual General Meeting

4 Maybank 2004 Annual Report

As Ordinary Business

1. To receive the Reports of the Directors and Auditors and the Audited Financial Statements forthe financial year ended 30 June 2004. Resolution 1

2. To declare a final dividend of 25 sen per share less 28% income tax for the financial yearended 30 June 2004 as recommended by the Board. Resolution 2

3. To re-elect the following directors who are retiring by rotation in accordance with Articles 96and 97 of the Articles of Association of Maybank (the Company) and being eligible haveoffered themselves for re-election:-

(i) Tuan Haji Mohd Hashir bin Hj Abdullah; Resolution 3(ii) Teh Soon Poh; and Resolution 4(iii) Dato’ Mohammed Hussein Resolution 5

MENU

5

Mayb

ank 2004 A

nn

ual R

epo

rt

4. To re-elect the following directors who are retiring in accordance with Article 100 of theArticles of Association of Maybank and being eligible have offered themselves for re-election:-

(i) Datuk Megat Zaharuddin bin Megat Mohd Nor; and Resolution 6(ii) Md Agil bin Mohd Natt Resolution 7

5. To consider and if thought fit, pass the following Resolution in accordance with Section 129(6)of the Companies Act, 1965:-

“That the following directors retiring in accordance with Section 129 of the Companies Act, 1965be and are hereby re-appointed as directors of the Company to hold office until the next AGM:-

(i) Dato’ Richard Ho Ung Hun; and Resolution 8(ii) Raja Tan Sri Muhammad Alias bin Raja Muhd. Ali Resolution 9

6. To approve the directors’ fees of RM656,830.62 in respect of the financial year ended 30 June2004. Resolution 10

7. To re-appoint Messrs. Ernst & Young as Auditors of Maybank to hold office until the conclusionof the next AGM in the year 2005 and to authorise the Board to fix their remuneration.

Resolution 11

As Special Business

8. To consider and if thought fit, to pass the following Ordinary Resolution:-

“That pursuant to Section 132D of the Companies Act, 1965, the Directors be and are herebyauthorised to issue shares in the Company at any time until the conclusion of the next AGMand upon such terms and conditions and for such purposes and to such person or persons asthe Directors may, in their absolute discretion, deem fit provided that the aggregate numberof shares to be issued does not exceed 10 per centum (10%) of the issued share capital ofthe Company for the time being, subject always to the approvals of all the relevant regulatoryauthorities being obtained for such issue and allotment.” Resolution 12

Notice of Dividend Entitlement and Closure of BooksNOTICE IS HEREBY GIVEN that subject to the approval of the shareholders at the AGM to be heldon 11 October 2004, a final dividend of 25 sen per share less 28% income tax for the financialyear ended 30 June 2004 will be paid on 27 October 2004 to shareholders registered in the Registerof Members at the close of business on 14 October 2004.

NOTICE IS HEREBY GIVEN that the Register of Members will be closed from 15 October 2004 to16 October 2004, for the determination of shareholders’ entitlements to the final dividend.

MENU



A depositor shall qualify for the entitlements to the final dividend only in respect of:-

a. Shares deposited into the Depositors’ Securities Accounts before 12.30 p.m. on 12 October2004 (in respect of shares exempted from mandatory deposit).

b. Shares transferred to the Depositors' Securities Accounts in respect of ordinary transfers before4.00 p.m. on 14 October 2004.

c. Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according tothe Rules of Bursa Malaysia Securities Berhad.

By Order of the Board,

MAHIRAM HUSINLS007885Company Secretary

Kuala Lumpur20 September 2004

Notes

1. The right of foreigners to vote in respect of securities is subject to Section 41(2) of the Securities Industry (Central Depositories) Act, 1991, the Securities Industry (Central Depositories) (Foreign Ownership) Regulations, 1996and the Articles of Maybank.

2. A member entitled to attend and vote at the 44th AGM is entitled to appoint a proxy to attend and on a showof hands or on a poll, to vote instead of him. A proxy shall be a member of the company, an Advocate, an approved company Auditor or a person approved by the Companies Commission of Malaysia.

3. Form of Proxy of a corporation shall be given under its Common Seal.

4. Duly completed Form of Proxy must be deposited at 14th Floor, Menara Maybank, 100, Jalan Tun Perak, 50050 Kuala Lumpur, by 9 October 2004 at 11.30 a.m.

5. For a Form of Proxy executed outside Malaysia, the signature must be attested by a Solicitor, Notary Public, Consul or Magistrate.

6. For scripless shareholders, only members registered in the record of Depositors on or before 12.30 p.m. on 6 October 2004 shall be eligible to attend the AGM.

MENU

7

Mayb

ank 2004 A

nn

ual R

epo

rt

7. EXPLANATORY NOTE ON SPECIAL BUSINESSThe proposed Ordinary Resolution 12 if passed, is to give the directors of the companyflexibility to issue and allot shares for such purposes as the Directors in their absolute discretionconsider to be in the interest of the Company, without having to convene a general meeting.This authority will expire at the next AGM of the Company.

8. Bursa Malaysia Securities Berhad’s Listing RequirementsPursuant to Paragraph 8.28(2) of the Bursa Malaysia Securities Berhad’s Listing Requirements,appended hereunder are:-

8.1 Details of Directors standing for re-election as in Agenda 3, 4 and 5 of the Notice of theAGM are set out in the Directors’ Profile appearing in the Annual Report.

8.2 For the financial year ended 30 June 2004, a total of 16 meetings were held. Details ofattendance at Board Meetings held in the financial year ended 30 June 2004 being asfollows:-

Name of Director No. of Meetings Attended

Tan Sri Mohamed Basir bin Ahmad 14/16

Dato' Richard Ho Ung Hun 16/16

Datuk Amirsham A Aziz 15/16

Raja Tan Sri Muhammad Alias bin Raja Muhd. Ali 16/16

Mohammad bin Abdullah 15/16

Haji Mohd Hashir bin Haji Abdullah 16/16

Teh Soon Poh 15/16

Datuk Abdul Rahman bin Mohd Ramli 16/16

Dato' Mohammed Hussein 12/16

Hooi Lai Hoong 14/16

MENU



8.3 The dates, time and place of the meetings held:-

Meeting Dates Time Place

17.7.2003 9.00 a.m. Kuala Lumpur

25.7.2003 9.00 a.m. Kuala Lumpur

25.8.2003 4.00 p.m. Kuala Lumpur

28.8.2003 10.15 a.m. Kuala Lumpur

25.9.2003 9.30 a.m. Bahrain

30.10.2003 10.00 a.m. Kuala Lumpur


20.11.2003 10.00 a.m. Kuala Lumpur

12.12.2003 9.00 a.m. Singapore

29.1.2004 10.00 a.m. Kuala Lumpur


26.2.2004 10.00 a.m. Kuala Lumpur

26.3.2004 10.00 a.m. Kuala Lumpur

29.4.2004 10.00 a.m. Kuala Lumpur


27.5.2004 10.00 a.m. Kuala Lumpur

24.6.2004 10.00 a.m. Kuala Lumpur

MENU

Listed on

Main Board of Bursa Malaysia on 17 February 1962

Company Secretary

Mahiram Husin155, Jalan BK 4/2, Bandar Kinrara58200 Kuala Lumpur

Auditors

Messrs Ernst & YoungChartered Accountants

Registered Office

14th Floor, Menara Maybank100, Jalan Tun Perak50050 Kuala LumpurMalaysiaTelephone : (6) 03-20708833Telex : MA 30438Facsimile : (6) 03-20702611Cable : MAYBANKSWIFT : MBBEMYKLAWebsite : http://www.maybank2u.comE-Mail : [email protected]

Registrar

Maybank14th Floor, Menara Maybank100, Jalan Tun Perak50050 Kuala LumpurMalaysia

ChairmanTan Sri Mohamed Basir bin Ahmad – P.S.M., J.S.M., D.P.C.M.

Vice ChairmanDato' Richard Ho Ung Hun – D.P.M.P.

President and CEODatuk Amirsham A Aziz – P.J.N.

Deputy PresidentsDato’ Mohammed Hussein – D.J.M.K.

Hooi Lai Hoong (retired 3 September 2004)

Md Agil bin Mohd Natt (appointed 4 September 2004)

MembersRaja Tan Sri Muhammad Alias bin Raja Muhd. Ali– P.J.K., P.P.T., K.M.N., S.M.P., J.M.N., D.P.S.K., D.I.M.P., D.P.J., P.S.M., S.J.J., S.P.N.S.

Mohammad bin Abdullah

Haji Mohd Hashir bin Haji Abdullah – J.M.N., S.M.S., P.P.T.

Teh Soon Poh

Datuk Abdul Rahman bin Mohd Ramli – P.J.N.

Datuk Megat Zaharuddin bin Megat Mohd Nor– D.P.C.M., P.J.N. (appointed 19 July 2004)

Company SecretaryMahiram Husin

Boar

d of

Dire

ctor

s

9

Mayb

ank 2004 A

nn

ual R

epo

rtCorporate

information

MENU

Profileof Directors


Non-independent non-executive director. He worked with Bank Negara Malaysiafrom 1965 and retired in 1993 as Advisor. He is a Fellow member of theMalaysian Institute of Bankers since 1980.

Appointed as a director of Maybank on 19 August 1993 and as Chairman ofMaybank on 9 October 1993. He serves as Chairman of the Strategic Planningand Credit Review Committees of the Board.

Current directorships in public companies include Mayban International Trust(Labuan) Berhad, Mayban Fortis Holdings Berhad, Aseambankers MalaysiaBerhad, Mayban Life Assurance Berhad, Mayban Allied Berhad, Mayban GeneralAssurance Berhad, Mayban Takaful Berhad, Maybank International (L) Limited,Maybank (PNG) Limited, PT Bank Maybank Indocorp, Maybank PhilippinesIncorporated and PhileoAllied Securities (Philippines) Incorporated.

Attended 14 out of the 16 Board Meetings held in the financial year. No familyrelationship with any director and is a nominee of the major shareholder ofMaybank. Save for the new ESOS as disclosed in the Financial Statements herein,there is no conflict of interest with Maybank and has never been charged forany offence.

TAN SRI MOHAMED BASIR BIN AHMAD

Chairman

Independent non-executive director. He was a member of Parliament from 1969 to1982. He was appointed as Deputy Minister of Road Transport in 1974 and wassubsequently appointed as Deputy Minister of Finance in 1976. In 1978, he wasappointed as Minister without Portfolio in the Prime Minister's Department andsubsequently as Minister of Labour and Manpower in the same year.

Appointed Vice-Chairman of Maybank on 27 January 1983. He serves asChairman of the Employee Share Option Scheme and a member of the CreditReview Committees of the Board.

Current directorships in public companies include Mayban Finance Berhad,Aseambankers Malaysia Berhad, Aseamlease Berhad, Mayban Trustees Berhad,Mayban International Trust (Labuan) Berhad, Mayban Unit Trust Berhad andMaybank International (L) Ltd.

Attended all the 16 Board Meetings held in the financial year. No familyrelationship with any director and/or major shareholder of Maybank. Save for thenew ESOS as disclosed in the Financial Statements herein and a TenancyAgreement with Maybank on the rental of a four-storey shophouse used asbranch premises, there is no conflict of interest with Maybank. Has never beencharged for any offence.

DATO’ RICHARD HO UNG HUN

Vice Chairman

(66 years of age – Malaysian)B.A., AMP (Harvard)D. Com Sc (Hon)

(77 years of age – Malaysian)Barrister at Law (Lincoln’s Inn)

MENU

DATO’ MOHAMMED HUSSEIN

DATUK AMIRSHAM A AZIZ

11

Mayb

ank 2004 A

nn

ual R

epo

rt

President and CEO

Non-independent executive director. Deputy President of Maybank. He joined theMaybank Group in 1977 and has worked in various capacities within the Group,including as Managing Director of Aseambankers Malaysia Berhad, theinvestment banking arm of the Group.

Appointed as an executive director of Maybank on 1 November 2000. He servesas a member of the Strategic Planning Committee of the Board.

Current directorships in public companies include Mayban Allied Berhad,Aseambankers Malaysia Berhad, Pelaburan Hartanah Nasional Berhad and PTBank Maybank Indocorp.

Attended 12 out of the 16 Board Meetings held during the financial year. Nofamily relationship with any director and/or major shareholder of Maybank. Savefor the new ESOS as disclosed in the Financial Statements herein, there is noconflict of interest with Maybank and has never been charged for any offence.

Deputy President

(54 years of age – Malaysian)B.Econs (Hons), Member of MICPA

(53 years of age – Malaysian)Bachelor of Commerce(Accounting)

Non-independent executive director. President and CEO of Maybank Group. He joined the Maybank Group in 1977 and has worked in various capacitieswithin the Group.

Appointed as executive director of Maybank on 18 August 1993 and asManaging Director of Maybank on 1 May 1994. He serves as a member of theStrategic Planning and Nomination Committees of the Board. He is the Chairmanof the Group Management Committee.

Current directorships in public companies include Mayban Finance Berhad,Aseambankers Malaysia Berhad, Mayban Fortis Holdings Berhad, CreditGuarantee Corporation Malaysia Berhad, Cagamas Berhad, PerbadananUsahawan Nasional Berhad and AFC Merchant Bank Limited.

He is the Chairman and director of Malaysian Electronic Payment System (1997)Sdn Berhad, a Council Member of the Association of Banks in Malaysia, adirector of the Institute of Bankers Malaysia and director of Islamic Banking andFinance Institute. He is also a member of the Advisory Board of the Pacific RimBankers Program. He is currently a director of Asian Pacific Bankers Club.

Attended 15 out of the 16 Board Meetings held in the financial year. No familyrelationship with any director and/or major shareholder of Maybank. Save for thenew ESOS as disclosed in the Financial Statements herein, there is no conflict ofinterest with Maybank and has never been charged for any offence.

MENU

Profileof Directors


Non-independent executive director. Deputy President of Maybank. He joined theMaybank Group in 1995.

Appointed as an executive director of Maybank on 4 September 2004.

Current directorships in public companies include Cagamas Berhad, MaybanDiscount Berhad and Mayban Unit Trust Berhad. He is currently the CouncilMember of the Association of Merchant Banks and a member of Advisory Councilof the International Centre for Leadership in Finance.

No family relationship with any director or major shareholder of Maybank. Savefor the new ESOS as approved by the shareholders at the EGM on 11 August2004, there is no conflict of interest with Maybank and has never been chargedfor any offence.

MD AGIL BIN MOHD NATT

Deputy President

Independent non-executive director. He was the Group Chairman of Felda from1 May 1979 to 30 June 2001.

Appointed as a director of Maybank on 17 March 1978. He serves as Chairmanof Risk Management and Nomination Committees of the Board. He also servesas a member of the Remuneration and Establishment, Employee Share OptionScheme and Strategic Planning Committees of the Board.

Current directorships in public companies include Kuala Lumpur Kepong Berhad,Sime Darby Berhad, Batu Kawan Berhad, Kumpulan Guthrie Berhad, MaybanFortis Holdings Berhad, PT Bank Maybank Indocorp and Cerebos Pacific Limited.He is also the Chairman of Highlands & Lowlands Berhad and ConsolidatedPlantations Berhad.

Attended all the 16 Board Meetings held in the financial year. No familyrelationship with any director and/or major shareholder of Maybank. Save for thenew ESOS as disclosed in the Financial Statements herein and a single relatedparty transaction as disclosed to the shareholders in the Circular dated 20 July2004 for the Extraordinary General Meeting of 11 August 2004 and announcedto Bursa Malaysia, there is no conflict of interest with Maybank. Has never beencharged for any offence.

RAJA TAN SRI MUHAMMAD ALIAS BIN RAJA MUHD. ALI

Member

(52 years of age – Malaysian)B.Sc Econ (Hons), Master of Science in Finance, AMP (Harvard)

(72 years of age – Malaysian)B.A (Hons), AMP (Harvard), D.Sc. (Hon), D.Econ. (Hon)

MENU

13

MOHAMMAD BIN ABDULLAH

Member

HAJI MOHD HASHIR BIN HAJI ABDULLAH

Independent non-executive director. He was the General Manager/Chief ExecutiveOfficer of Kelang Port Authority prior to his retirement in 1991.

Appointed as a director of Maybank on 7 November 1996. Serves as a memberof the Audit, Nomination, Credit Review and Risk Management Committees ofthe Board.

Current directorships in public companies include Mayban Unit Trust Berhad,Mayban Life Assurance Berhad, Mayban Discount Berhad, Mayban FinanceBerhad, Mayban Fortis Holdings Berhad, Mayban General Assurance Berhad,Mayban Takaful Berhad, Mayban Life International (Labuan) Ltd, MFSL Limitedand PT Bank Maybank Indocorp.

Attended all the 16 Board Meetings held in the financial year. No familyrelationship with any director and/or major shareholder of Maybank. Save for thenew ESOS as disclosed in the Financial Statements herein, there is no conflict ofinterest with Maybank and has never been charged for any offence.

Member

(63 years of age – Malaysian)Member of MICPA, Member of MIA

(68 years of age –Malaysian)ACA (Aust), ACIS (UK),Member of MICPA, FCMI (UK), FCIT (UK), AMP (Harvard)

Independent non-executive director. He was the Chairman of Coopers & LybrandMalaysia prior to his retirement in 1995 and he is currently the Chairman of NegaraProperties (M) Berhad, Malaysian National Reinsurance Berhad, Malaysia RatingCorporation Berhad, Labuan Reinsurance (L) Limited and Mayban Discount Berhad.

Appointed as a director of Maybank on 11 January 1995. He serves as Chairmanof the Remuneration and Establishment Committee and a member of the Audit,Employee Share Option Scheme, Credit Review and Nomination Committees ofthe Board.

Current directorships in public companies include Golden Hope PlantationsBerhad, Mayban Finance Berhad, MIMOS Berhad, Maybank International (L) Ltd,Maybank (PNG) Ltd and Malaysian Bulk Carriers Berhad.


MENU

Profileof Directors


Independent non-executive director. He was the former General Manager ofCredit Control Division of Maybank prior to his retirement in 1992.

Appointed as a director of Maybank on 21 October 1997. He serves asChairman of the Audit Committee and a member of the Remuneration andEstablishment, Risk Management and Credit Review Committees of the Board.

Current directorships in public companies include Mayban Finance Berhad,Mayban Trustees Berhad, Mayban International Trust (Labuan) Berhad,PhileoAllied Trustee Berhad, Aseambankers Malaysia Berhad, MaybankInternational (L) Ltd and Maybank Philippines Incorporated.


TEH SOON POH

Member

Non-independent non-executive director. He was the Group Chief Executive ofGolden Hope Plantations Berhad prior to his retirement in 1999.

Appointed as a director of Maybank on 17 November 1999. He serves as amember of the Remuneration and Establishment, Audit, Credit Review,Nomination and Strategic Planning Committees of the Board.

Current directorships in public companies include Kuala Lumpur Kepong Berhad,Malaysia National Insurance Berhad and Mayban Finance Berhad. He is also theChairman of Johore Tenggara Oil Palm Berhad and Takaful Nasional Sdn Berhad.

Attended all the 16 Board Meetings held in the financial year. No family relationshipwith any director and is a nominee of the major shareholder of Maybank. Save forthe new ESOS as disclosed in the Financial Statements herein, there is no conflictof interest with Maybank and has never been charged for any offence.

DATUK ABDUL RAHMAN BIN MOHD RAMLI

Member

(68 years of age – Malaysian)Barrister at Law (Middle Temple)

(65 years of age – Malaysian)ACA (Aust), Member of MICPA,Member of MIA

MENU

15

Mayb

ank 2004 A

nn

ual R

epo

rt

DATUK MEGAT ZAHARUDDIN BIN MEGAT MOHD NOR

Independent non-executive director. He was the Regional CEO/BusinessManaging Director of Shell Exploration and Production International B.V. prior tohis retirement in January 2004.

Appointed as a director of Maybank on 19 July 2004. He is currently the non-executive Chairman and director of Maxis Communication Berhad and also as aBoard member of the International Centre for Leadership in Finance and theCapital Market Development Fund.

No family relationship with any director and/or major shareholder of Maybank.No conflict of interest with Maybank. Has never been charged for any offence.

Member

(55 years of age – Malaysian)B.Sc (Hons) in Mining Engineering

MENU

Management


Graduated with a Bachelor of Science Degree in Economics from BrunelUniversity, United Kingdom and Masters of Science in Finance from CityUniversity Business School, London. Attended the Advanced ManagementProgram, Harvard University, USA. Joined the Group in 1995 as the GeneralManager of Corporate Banking. He is the currently the Deputy President.

Agil Natt

Graduated with a Bachelor of Commerce degree majoring in Accountingfrom the University of Newcastle, Australia in 1972. Attended the AdvancedManagement Program, Harvard University, USA. Joined the Group in 1977and is currently the Deputy President.

Dato’ Mohammed Hussein

Graduated with a Bachelor of Economics (Honours) degree, majoring inAccounting, from the University of Malaya in 1973 and member of theMalaysian Institute of Certified Public Accountants (MICPA). Joined theGroup in 1977 and is currently the President and Chief Executive Officer ofthe Maybank Group.

Datuk Amirsham A Aziz

Fellow of the Institute of Chartered Accountants (England and Wales). Joined theGroup in 1975. He is currently Head of International Banking Group and SeniorExecutive Vice President for Maybank’s Singapore operations.

Spencer Lee Tien Chye

MENU

17

Mayb

ank 2004 A

nn

ual R

epo

rt

Graduated with a Bachelor of Economics (Honours) degree, majoring inBusiness Administration from the University of Malaya. Has been in theinsurance business of the Group since 1977 and currently serving as Head ofthe Insurance Business and Chief Executive Officer of Mayban Fortis Holdings.

Kassim Zakaria

Graduated with a degree in Business Administration from Ohio StateUniversity, USA and Masters in Business Administration from Tennesse StateUniversity, USA. Joined the Group in 1996 as General Manager ofConsumer Banking. He is currently Head of the Cards Business Group.

Ashraf Ali Abdul Kadir

Graduated with a Bachelor of Economics (Honours) degree from theUniversity of Malaya in 1975. Joined the Group in 1975 and served invarious capacities and positions. He is currently Head of the Retail FinancialServices Group.

Johar Che Mat

Fellow of the Institute of Chartered Accountants (England and Wales). Joinedthe Group in 2003 as Deputy Chief Executive Officer of Aseambankers. He iscurrently Head of the Investment Banking Group.

Jeyaratnam Tamotharam Pillai

MENU

Holds a Bachelors Degree in Economics from Universiti Malaya and aMasters in Economics from Vanderbilt University, USA. Joined the MaybankGroup in 1989 and is currently Head of Corporate Planning.

Nik Nasir Majid

Graduated with a Degree in Social Science from Universiti Sains Malaysiaand a Masters in Business Administration from University of Strathclyde,United Kingdom. Joined the Group in 2001 as Head of Human Resource.

Mohd Zulkifli bin Itam

Graduated with a Bachelor’s Degree in Economics from Universiti Malaya in1974. Joined the Group in 1974 and served in various capacities. He is currentlythe Head of Central Operations and Information Systems.

Tong Hon Keong

Management


Graduated with a Bachelor of Economics (Honours) degree from theUniversity of Malaya and honours degree in law from the University ofLondon, United Kingdom. He is a Barrister-at-Law and was called to the Barof England and Wales at Lincoln’s Inn in 1984. Joined Maybank in 1992 asHead of Credit Control Division. He is currently Head of Risk Managementand Chief Risk Officer for the Group.

Choo Yee Kwan

MENU

19

Mayb

ank 2004 A

nn

ual R

epo

rt

Graduated with a Bachelor of Science degree, majoring in Mathematics,from Illinois State University and Masters in Business Administrationmajoring in Finance from the University of North Texas, USA. He is theChief Executive Officer of Mayban Securities.

Hamzah Mahmood

Graduated with a degree in Economics from Monash University Australia in1986 and was later admitted as a member of the Institute of CharteredAccountants Australia. He also holds a post graduate Diploma in Financefrom the Securities Institute of Australia. Joined the Maybank Group in2004 as Head, Enterprise Financial Services Group.

Muhamad Umar Swift

Graduated with a bachelor’s degree in marketing and Masters in BusinessAdministration from Southern Illinois University, Carbondale, U.S.A. Joinedthe Group in 1981 and served in various capacities including internationalpostings. He is currently Chief Credit Officer.

Zulkiflee Abbas Abdul Hamid

Graduated with a Degree in Finance from St. Louis University, USA in 1984.Joined the Group in 1988 and served in various capacities. He is currently theHead of the Automobile Financing Group.

Amirudin bin Abdul Halim

MENU

FinancialHighlights


Group Bank

2004 2003 2004 2003

PROFITABILITY (RM Million)

Operating revenue 10,521 10,038 8,421 8,538

Operating profit 3,851 3,532 3,321 3,533

Profit before tax expense 3,359 2,620 2,883 2,738

Profit after tax expense

and minority interests 2,425 1,996 2,092 2,055

Group Bank

2004 2003 2004 2003

KEY BALANCE SHEET DATA (RM Million)

Total Assets 179,507 160,955 143,551 127,654

Dealing and investment securities 29,003 25,908 22,864 18,833

Loans, advances and financing 109,070 102,488 86,718 80,160

Total liabilities 164,445 147,070 131,452 116,378

Deposits from customers 123,366 109,535 96,869 86,837

Paid-up capital 3,600 3,589 3,600 3,589

Shareholders' funds 14,623 13,485 12,099 11,276

Commitments and contingencies 92,377 78,527 86,909 73,194

Group Bank

2004 2003 2004 2003

SHARE INFORMATION

Per share (sen)

Basic earnings 67.3 55.9 58.1 57.6

Diluted earnings 67.3 55.9 58.1 57.6

Gross dividend 60.0 52.0 60.0 52.0

Net tangible assets 406.2 375.7 336.1 314.2

MENU

21

Mayb

ank 2004 A

nn

ual R

epo

rt

Group Bank

2004 2003 2004 2003

FINANCIAL RATIOS (%)

Profitability Ratios

Net interest margin on

average interest-earning assets 2.9 3.0 2.6 2.7

Net interest on average

risk-weighted assets 3.8 3.7 3.5 3.5

Net return on average

shareholders’ funds 17.3 15.3 17.9 19.0

Net return on average assets 1.4 1.3 1.5 1.7

Net return on average

risk-weighted assets 2.0 1.7 2.3 2.3

Cost to income ratio 40.2 39.9 37.4 32.9

Capital Adequacy Ratios

Core capital ratio 10.3 10.2 10.8 10.9

Risk-weighted capital ratio 15.1 15.3 14.0 14.4

Asset Quality Ratios

Net non-performing loans ratio

(3-month classification) 6.0 6.2 6.0 6.0

Loan loss coverage 74.4 76.0 71.6 75.8

Gross loan to deposit ratio 95.8 102.6 96.5 100.9

Deposits to shareholders' funds (times) 8.4 8.1 8.0 7.7

Valuations on Share

Gross dividend yield (%) 5.9 6.0 — —

Dividend payout ratio (%) 64.1 79.7 74.3 77.5

Price to earnings multiple (times) 15.0 15.4 — —

Price to book multiple (times) 2.5 2.3 — —

MENU

SegmentInformation


Revenue (RM’000)

2004 2003

1 Banking 7,921,836 7,418,224 2 Finance 1,827,585 1,900,683 3 Investment Banking 451,180 431,519 4 Insurance and Takaful 247,931 230,426 5 Others 72,388 56,758

10,520,920 10,037,610

Profit Before Taxation (RM’000)

2004 2003

1 Banking 2,211,133 1,600,690 2 Finance 789,547 696,464 3 Investment Banking 207,805 186,111 4 Insurance and Takaful 94,416 103,837 5 Others 55,696 32,572

3,358,597 2,619,674

Total Assets Employed (RM’000)

2004 2003

1 Banking 147,390,167 128,065,028 2 Finance 21,005,391 21,781,250 3 Investment Banking 7,605,881 8,446,200 4 Insurance and Takaful 3,336,119 2,451,134 5 Others 169,869 211,785

179,507,427 160,955,397

An

alys

is b

y A

ctiv

ity

MENU

23

Mayb

ank 2004 A

nn

ual R

epo

rt

Revenue

2004 2003

Banking

Finance

InvestmentBanking

Insurance andTakafuIOthers

Banking

Finance

InvestmentBanking


Banking

Finance

InvestmentBanking


Profit Before Taxation

Total Assets Employed

Revenue

Banking

Finance

InvestmentBanking


Banking

Finance

InvestmentBanking


Banking

Finance

InvestmentBanking




MENU

SegmentInformation


Revenue (RM’000)

2004 2003

1 Malaysia 9,283,978 8,824,988 2 Singapore 754,514 718,026 3 Other Locations 482,428 494,596

10,520,920 10,037,610

Total Assets Employed (RM’000)

2004 2003

1 Malaysia 154,300,974 138,189,132 2 Singapore 17,558,393 14,739,803 3 Other Locations 7,648,060 8,026,462

179,507,427 160,955,397

An

alys

is b

y G

eog

rap

hic

al L

oca

tio

n

Profit Before Taxation (RM’000)

2004 2003

1 Malaysia 3,137,461 2,486,464 2 Singapore 142,510 94,701 3 Other Locations 78,626 38,509

3,358,597 2,619,674

MENU

25

Mayb

ank 2004 A

nn

ual R

epo

rt

Revenue

2004 2003



Revenue

Malaysia

Singapore

Other Locations

Malaysia


Singapore

Other Locations

Malaysia


Singapore

Other Locations

Malaysia

Singapore

Other Locations

Malaysia

Singapore

Other Locations

Malaysia

Singapore

Other Locations

MENU

5-YearGroup Financial Summary


Year ended 30 June 2004 2003 2002 2001 2000

OPERATING RESULTS (RM Million)Operating profit 3,851 3,532 3,731 3,475 3,655Profit before tax expense 3,359 2,620 2,354 1,121 2,135Profit after tax expense and minority interests 2,425 1,996 1,659 819 1,359

KEY BALANCE SHEET DATA (RM Million)Total assets 179,507 160,955 150,656 147,348 131,311Loans, advances and financing 109,070 102,488 95,453 98,094 79,826Total liabilities 164,445 147,070 137,641 135,976 119,710Deposits from customers 123,366 109,535 102,592 97,076 81,867Paid-up capital 3,600 3,589 3,550 2,352 2,338Shareholders' funds 14,623 13,485 12,658 11,052 11,336Commitments and contingencies 92,377 78,527 71,057 72,425 59,407

SHARE INFORMATIONPer share (sen)

Basic earnings 67.3 55.9 46.7 23.1 38.6Diluted earnings 67.3 55.9 46.4 23.0 38.2Gross dividend 60.0 52.0 12.0 12.0 18.0Net tangible assets 406.2 375.7 356.6 469.9 484.9

Share price as at 30 June (RM)* 10.10 8.60 8.80 6.90 10.30Market capitalisation (RM Million) 36,360 30,865 31,240 16,088 36,005

FINANCIAL RATIOS (%)Profitability Ratios/Market ShareNet interest margin on average interest-earning assets 2.9 3.0 3.1 3.3 3.4Net interest on average risk-weighted assets 3.8 3.7 3.9 4.2 4.3Net return on average shareholders' funds 17.3 15.3 14.0 7.3 12.7Net return on average assets 1.4 1.3 1.1 0.6 1.1Net return on average risk-weighted assets 2.0 1.7 1.5 0.8 1.5Cost income ratio 40.2 39.9 36.9 37.7 30.4Gross loan to deposit ratio 95.8 102.6 102.4 112.3 106.2Net non-performing loans ratio (3-month classification) 6.0 6.2 7.2 7.7 5.6Domestic market share in:

Loans, advances and financing 20.6 21.1 20.8 22.6 22.5Deposits from customers – Savings Account 29.8 30.3 30.7 31.8 32.6Deposits from customers – Current Account 22.7 23.2 22.8 23.0 22.7

Capital Adequacy RatiosCore capital ratio 10.3 10.2 10.3 9.1 10.9Risk-weighted capital ratio 15.1 15.3 15.6 13.0 15.2

Valuations on ShareGross dividend yield (%) 5.9 6.0 1.4 1.7 1.7Dividend payout ratio (%) 64.1 79.7 18.5 24.9 22.4Price to earnings multiple (times) 15.0 15.4 18.8 29.6 26.7

* Adjusted for bonus issue

MENU

Operating profit

RM Billion

2000

2001

2002

2003

2004

3.7

3.5

3.7

3.5

3.9

Profit before taxation

RM Billion

2000

2001

2002

2003

2004

2.1

1.1

2.4

2.6

3.4

Total assets & Loan and advances

RM Billion

2000

Total assets

2001

2002

2003

2004

131.379.879.8

147.398.198.1

150.795.595.5

161.0102.5102.5

179.5109.1109.1

Shareholder’s fund

RM Billion

2000

2001

2002

2003

2004

11.3

11.1

12.7

13.5

14.6

Loan and advances

CalendarCalendarFinancial

25.8.2003 – Announcement of the audited results of Maybankand of the Group and announcement of the finaldividend for the financial year ended 30.6.2003

19.9.2003 – Notice of the 43rd Annual General Meeting, Noticeof Dividend Payment and Book Closure andissuance of Annual Report for the financial yearended 30.6.2003

11.10.2003 – 43rd Annual General Meeting

18 and 19.10.2003 – Book closure for determining the entitlement forthe final dividend

30.10.2003 – Date of payment of the final dividend of 17 senper share (less 28% Malaysian Income Tax) inrespect of the financial year ended 30.6.2003

7.11.2003 – Announcement of the unaudited results ofMaybank and of the Group for the first quarter ofthe financial year ending 30.6.2004

20.2.2004 – Announcement of the audited results of Maybankand of the Group and announcement of thedividend for the half year of the financial year ended31.12.2003

16 and 17.3.2004 – Book closure for determining the entitlement of thedividends

29.3.2004 – Date of payment of the interim dividend of 10 Senper share (less 28% Malaysian Income Tax) andspecial dividend of 25 sen per share (less 28%Malaysian Income Tax) in respect of the financialyear ending 30.6.2004

11.5.2004 – Announcement of the unaudited results of Maybankand of the Group for the third quarter of thefinancial year ending 30.6.2004

20.7.2004 – Notice of the Extraordinary General Meeting

11.8.2004 – Extraordinary General Meeting

11.8.2004 – Announcement to Bursa Malaysia that all resolutionson the proposed ESOS at the Extraordinary GeneralMeeting had been approved by the shareholders

30.8.2004 – Announcement of the audited results of Maybankand of the Group and announcement of the finaldividend for the year ended 30.6.2004

20.9.2004 – Notice of the 44th AGM, Notice of DividendPayment and Book Closure and issuance of annualreport for the financial year ended 30.6.2004

11.10.2004 – 44th Annual General Meeting

15 and 16.10.2004 – Book closure for determining the entitlement forthe final dividend

27.10.2004 – Date of payment of the final dividend of 25 senper share (less 28% Malaysian Income Tax) inrespect of the financial year ended 30.6.2004

MENU

Letterto Shareholders

INTRODUCTIONON BEHALF OF THE BOARD OF DIRECTORS, WE ARE PLEASED

TO PRESENT THE ANNUAL REPORT AND STATEMENT OF

ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2004.

MENU

29

Overall Business Environment

The operating environment during our last financial year was better than the preceding period. At home, economic growth strengthened from 5.2% to 7.0%. Domestic inflation remained lowallowing the Government to continue with its accommodative monetary policy. Consumer sentimentwas upbeat given the stability of the job market, broader recovery of the world economy and a smoothtransition on the local political front. Hence, from 5.0% growth during the previous period, householdspending increased significantly by 9.0%. Economic growth also picked up for countries in the region.In Singapore, GDP growth strengthened from 1.0% to 6.6% whilst for the Philippines, economicgrowth trended up from 4.9% during the second half of 2003 to 6.3% during the first half of 2004.

Riding on the positive consumer sentiment, lending to the household segment increased by 14.1% thusaccounting for 98% of the overall loan growth during the period. Lending to small and medium scaleenterprises (SMEs) maintained it strong growth of around 7.4% whilst bank financing of largeenterprises contracted by 0.2%. With this performance, outstanding loans of the banking systemrecovered strongly to grow by 6.2% against a contraction of 4.0% during the preceding period.

MENU


As a result of the good performance of the export sector,the domestic economy continued to record a substantialtrade surplus. The surplus, which helped to strengthengrowth in national income, also added fresh liquidity intothe banking system. This additional l iquidity wasresponsible for a 7.1% growth in banking system depositsand hence brought down loan-deposit ratio from 83.7%in July 2003 to 80.2% in June 2004. The decline in theloan-deposit ratio signifies the growing magnitude ofexcess deposits. With the continuing rigidity of thedomestic retail deposit rate, banking institutions had tobear a negative carry on this deposit thus imposingpressure on the interest margin.

It was certainly a good year for the domestic equity market.Benefiting from improving economic fundamentals, a smoothpolitical transition as well as a high level of global liquidity,the Composite Index of Bursa Malaysia rose by 18.5% from691.96 as at 30 June 2003 to 819.86 as at 30 June 2004.The average monthly business volume of RM23.9 billion wasalmost three times higher compared with the precedingperiod. Encouraged by the strong market activity, thenumber of initial public offerings approved by SecuritiesCommission increased from 45 in the preceding period to 74during the review period, while the number of approvedcapital raising exercises rose from 138 to 180.

L e t t e r t o S h a r e h o l d e r s

Maybank Strategic Initiatives: Major Outcomes

In our last report to shareholders, we had detailed outseveral strategic initiatives that would place the MaybankGroup in the league of leading regional financialconglomerates. These initiatives include the emplacement ofa customer-centric organisation model, strengthening salesculture and technology infrastructure, improved performancemanagement and reward system, efficient operating modeland delivery channels as well as creation of new valuedrivers. Assisted by the positive business environment duringthe financial year, these initiatives began to bear fruit andMaybank re-affirmed its position among the top five largestfinancial institutions in the Asean region.

In the home market, the Maybank Group is the biggestfinancier and mobiliser of domestic savings. Outstandingloans from domestic operations grew by 4.7% at the Banklevel and 3.5% at the Group level. Traditional deposits onthe other hand, grew by 8.4% for the Bank and 7.3% forthe Group. As of June 2004, Maybank accounted for20.4% of the Malaysian banking system’s outstandingloans and 22.2% of traditional deposits. Maybank’sleadership in financing was most prominent in the area oftrade finance with market share strengthening from 22.5%in July 2003 to 23.5% in June 2004; consumer finance at18.6% and financing of small and medium scaleenterprises at 21.4%. Our extensive delivery network andstrong branding gave us an edge in mobilising deposits.Our market share for savings deposits stood at 33.8% andcurrent account deposits at 30%.

MENU

31

Mayb

ank 2004 A

nn

ual R

epo

rt

MENU


Maybank Group is the leader in Islamic banking business.Its financing activities during the year rose by 24.1% thusaccounting for 13.4% of the Group’s total loans. As atJune 2004, the Group’s Islamic financing market share was29.0%. Looking at the achievement of the Group’s Islamicbanking business, the success was attributable to theprogressive nature of the business model adopted. Thebenefits of scale and synergy afforded by the modelthrough the sharing of infrastructure and resources as wellas greater flexibility enjoyed by customers are among thekey success factors of the Group in this business. Indeed,this model would have a greater chance of bringingIslamic banking and finance to new heights. For MaybankGroup, Islamic banking is a profitable business with grossreturn on equity of 14.0%, and this was well above thoserecorded by Islamic banking institutions in the country.

Among Malaysian banks, Maybank has the largestpresence outside Malaysia. Our offices outside the countrybegan as an extension of domestic banking services,serving the needs of customers for external trade activities.Over the years, we have diversified our activities to providesupport to Malaysian and Singaporean overseasinvestments. More recently, we expanded further the focusof our overseas operations to include local business. Whilewe had a challenging period as some of the overseasoperations were badly affected by regional financial crisis,we remained committed to these locations. Ourperseverance is showing positive results. During the lastfinancial year, all our major overseas units registeredprofitable operations. Maybank Philippines Incorporatedand PT Bank Maybank Indocorp recorded sharpturnaround with profit before tax of RM1.4 million andRM8.4 million respectively against losses of RM17.3 millionand RM59.6 million respectively during the precedingperiod. Maybank will continue to look at opportunities

outside its home base using commercial banking as aplatform to expand into other financial services.

Fee income is the emerging value driver of MaybankGroup. With narrowing interest margin – a by-product ofgrowing maturity of the domestic banking industry – feeincome offers exciting revenue growth potential. Our focusin this area had shown results. In the stockbrokingbusiness, the Group market share improved to an average10.8% and this reflects our competitive strength and thesuccess of our business model, built on the premise ofGroup synergy. The Group’s position in the insuranceindustry strengthened further. In life insurance business,our industry ranking for new business improved from fifthto second position and our non-life business ranked firstin terms of operating margin and second position in termsof absolute operating profit. Payments business is anotherfocus area and this includes remittances, retail purchasesand trade payments services. During the year, fee fromremittances rose by 29.2% and fees associated with creditcard grew by about 19%. The foreign exchange profit,derived almost exclusively from customers’ trade andpayments activities, improved by 67.2%. We look at ourfee income performance as a testament of a successfulbusiness model whereby customer touch-points wereharnessed to the maximum, branding been capitalised andopportunities for Group synergy were fully exploited.

Productivity enhancement is another strategic focus ofMaybank Group, particularly in the light of increasing costpressure and rigid cost structure. The results in this areawere encouraging. Despite 22.7% increase in total assetsof the Group between financial year 2001 and financialyear 2004, total manpower strength reduced from 21,537to 20,821. Hence, asset per employee of the Groupincreased from RM6.79 million to RM8.62 million.


MENU

33

Mayb

ank 2004 A

nn

ual R

epo

rt

Operating profit per employee also increased from RM162,698 to RM184,939. Our ability to controlhead-counts was among the factors that kept Group cost-to-income ratio at around 40%. In fact,had it not been for the investment to enhance risk framework, infrastructure to support future salescapability and service quality, the ratio would have improved. For the Group, these are criticalinvestments to support future growth and competitive strength. While our cost-to-income ratio washigher than before, it was among the lowest globally and we believe the level is justifiable.

The continuing emphasis on asset quality also brought in encouraging results. Gross non-performingloans for the Group reduced by 5.9% and in terms of ratio to total loans, net non-performing loanratio declined from 6.20% to 5.97%. The improvement in asset quality helped to reduce loan lossand provisions from RM911.8 million to RM495.4 million.

Group Financial Performance

The achievements highlighted above strengthened further the financial performance of the MaybankGroup. For the year ended 30 June 2004, Group pre-tax profit improved by 28.2% to RM3.36billion and net profit increased by 21.4% to RM2.42 billion. This result represents net return onequity of 17.3%, a marked improvement from 15.3% registered for the previous financial year.

MENU


During the year, net interest income recovered by registeringgrowth of 5.2% against stagnation in the previous year.This was achieved on the back of 2.6% growth inconventional loans, an almost 20% reduction in net interestsuspended and 2.2% reduction in interest expense. Incomefrom Islamic banking operations improved by 36.2% toRM522.0 million. This was after setting aside higher profitequalisation reserves of RM101.6 million against RM65.5million in the previous year. Overall fee income, includingforeign exchange profit, increased by 50.3%. However, withlower investment income and trading gains, total non-interest income only grew by 14.7%.

With the exception of Mayban Life Assurance Berhad, allcompanies within the Group registered higher profit. Thepre-tax profit of Mayban Finance Berhad improved by8.4% to RM742.1 million on account of better assetquality and higher income from Islamic bankingoperations. Aseambankers benefited from improvement inthe value of investment securities, growth in fee income aswell as write-back on loans. Its pre-tax profit improved by55.6% to RM113.1 million. Riding on strong performanceof local equity market, the stockbroking business came inwith sterling result, reporting pre-tax profit of RM54.5million against RM9.5 million in the previous year. Pre-taxprofit of non-life business improved by 21.3% to RM74.4mill ion following strong focus on retail and SMEssegments as well as higher business growth throughsynergistic relationship with the commercial banking armof the Group. The profitability of life insurance business,however, was impacted by lower transfer of actuarialsurplus on life fund, resulting in pre-tax profit for thecompany to fall from RM32.0 million to RM9.9 million.

Group’s operations in Asean countries showed promisingresults. Singapore operations recorded strong growth inpre-tax profit of 50.4% to RM144.2 million whilst thePhil ippines and Indonesian operations registeredturnaround. On the whole, Maybank Group overseasoperations contributed 6.5% of the total pre-tax profits,up from 5.1% during the previous financial year.

Challenges and Prospects

Recent development points to a more volatile economicscenario. The uncertainty created by the movements inenergy price, threats of terrorism, the prospects of risingUS interest rates and the ability of China to engineer softlanding are some of the factors influencing our businessenvironment. In the light of higher price of energy,production cost in the domestic economy has increasedthus reducing the operating margin. Construction sector,which in the past, served as a conduit for the public sectorto accelerate economic growth, is under pressure with theneed to reduce budget deficit.

Apart from these developments, the economy is alsoundergoing structural changes. The most significant hasbeen the shorter business cycle, which together with thespeed of information flows resulted in a more volatilebusiness environment. For Malaysia, sources of economicgrowth is fast moving to the tertiary sector asmanufacturing activities based on cheap labour cost islosing their competitive strength. Furthermore, highsavings accumulation in the past and stable job markethave given households sustained spending power thatcreate a strong consumer economy. Together with highstandard of education, the households are nowdemanding new investment products that will facilitateindividual financial planning and wealth management.


MENU

35

Mayb

ank 2004 A

nn

ual R

epo

rt

The Malaysian financial services industry has also grown in maturity. In the area of financing, capitalmarket is becoming more important such that growth in banking sector loans is no longer multiples ofthe economic growth. Competition among industry players is at all time high, thus accelerate the paceat which banking products being commoditised. As a result of these developments, pricing of bankingproducts come under pressure with interest margin converges to that of the developed economies.

MENU


Maybank Group is well prepared to face these challenges.Our strong customer base, branding, extensive deliverynetworks and economies of scale give us leading edge tocapitalise on the growth of the tertiary sector and thehousehold economy. In fact, with commercial bankingrelationships serving as the platform for other businesslines, we have managed to cement closer link withcustomers. The strength of this linkage is shown by theincrease in cross-sell ratio for the upper segment of themarket from 3.58 products per customer in June 2003 to4.83 products in June 2004 and for the middle marketsegment from 2.87 to 3.61 products.

We are fully aware of the threats that the financial servicesindustry will transform itself into a highly commoditisedbusiness. The answer for us is to create distinctions basedon the quality of products and services. This has been amajor focus for the Maybank Group where qualitycustomer service is being institutionalised as the mostimportant element in the Group corporate culture.Essentially, efforts in this area are not limited to training orskill enhancement, which is an important input to createquality service. For quality to be a corporate culture, theGroup also incorporated service standard as one of theparameters in staff performance measurement. In addition,organisation and governance structures are shaped in sucha way to create greater accountability on service standard.

Higher maturity of the Malaysian financial market createsurgency to strengthen our investment banking arm. Wehave been very successful in the stockbroking businesswhere we command a market share of around 10.8%. Weare also strong in the private debt market with ourissuance market share stood at 21%. However, given thecompetit ive nature of this business l ine, internalrestructuring of investment banking unit is in progress.This exercise is aimed at bringing about greater customerfocus and better deals origination. It will also enable moreeffective linkages with other business units in the Group.

We are encouraged with recent performance of ouroverseas operations and it gives us greater confidence ofexpecting stronger and sustained growth in the future.The key focus for major overseas units is to expand scaleand scope to ensure stability in performance.

Awards and Recognition

Maybank Group continues to be recognised as the leadingfinancial institution in the country. The Banker Magazine,for the third time, awarded Maybank with the title ‘Bankof the Year’ and the Asiamoney recognised us asMalaysia’s Best Bank in cash management. Euromoney, onthe other hand, presented us with the award for BestProvider of Islamic Financial Services in Asia and BestIslamic Wholesale Financial Services Provider. The quality ofour funds transfer service was recognised by a leading USglobal bank and for achieving 95.77% straight throughprocessing for USD funds transfer, Maybank was presentedwith Quality Recognition Award by JP Morgan ChaseBank. During the year, Maybank Cards Business wasawarded the ISO 9001:2000 Certification for processing ofapplications and issuance of credit cards. The CentralOperations also received similar certification for qualityoperating system relating to the provision of paymentsservices. These certifications are very much customer-oriented that require the organisation to provide highestquality of service acceptable to the customers.

Capital Management and Dividend

Maybank’s financial strength improved further with totalshareholders’ funds for the Group increasing to RM14.62billion as of 30 June 2004 from RM13.48 billion a yearearlier, and for the Bank, to RM12.10 billion fromRM11.28 bil l ion. Taking into account the generalprovisions and subordinated obligations, the capital basefor the Group stood at RM19.38 billion and the Bank at


MENU

37

Mayb

ank 2004 A

nn

ual R

epo

rt

RM14.09 billion. Measured in relation to total risk weighted assets; the total capital ratio for theGroup as at June 2004 was 15.11% and the Bank at 14.07%. This level is well above the minimumrequirement of 8%.

Maybank continues to place strong emphasis on capital management. The push towards strongergrowth in fee income and balancing risk-reward relationship in fund based activities are among thestrategies to manage capital. In other words, optimising the use of capital to support business growthhas always been the major focus in capital management. Indeed business growth could also berealised through acquisition of strategic interests in new business streams and in this case, internallygenerated fund is required to complement sources from the capital market. These factors have stronginfluence on the magnitude of the dividend pay out and having considered them, the Board ofDirectors is recommending a final dividend of 25% less 28% income tax. Including interim dividendof 35% less 28% income tax, total dividend pay out in respect of the accounts for the financial yearended 30 June 2004 would be 60% less 28% income tax. For the Group, this would amount toRM1,555.27 million or an equivalent of 82% of distributable net profit for the year.

Acknowledgement

The ability of Maybank to continue with its excellent performance can be attributed principally toits employees, management team and members of the board. All of them have shown highest levelof commitment, dedication and loyalty. We are taking this opportunity to record our appreciationto each and every one of them. Our special tribute is to the three key individuals, Dato’ Hilmey binMohd Taib, a fellow board member, Ms. Hooi Lai Hoong, the Deputy President and Dato’ WanIsmail bin Wan Abdul Rahman, the Chief Executive Officer of Mayban Finance Berhad. They hadretired from the Group after long years of dedicated service and contributed significantly to thegrowth of our organisation. On a happy note, we would like to welcome Datuk Megat Zaharuddinbin Megat Mohd Nor and En Agil Natt as new members of the Maybank board.

Tan Sri Mohamed Basir bin AhmadChairman of the Board

Amirsham A AzizPresident and CEO

MENU

Statementon Corporate Governance


Maybank has proactively sought to promote its

adherence to globally recognised best practices in corporate

governance as a distinguishing competitive feature.

Maybank has consistently nurtured a corporate culture that emphasizes upholding and maintaining the highest standardsof corporate governance. Maybank has proactively sought to promote its adherence to globally recognised best practicesin corporate governance as a distinguishing competitive feature. Towards this end, many of the mechanisms, policies andmeasures that have been put in place to ensure greater transparency, are more robust than those mandated by localgovernance codes or regulatory strictures. This strict compliance stance has also been diligently observed in the externaljurisdictions in which the Group operates. In recognition of Maybank’s efforts in this area, a joint study by Standard &Poor’s and the Corporate Governance and Financial Reporting Centre of the National University of Singapore, rankedMaybank as being among the top 5 out of the 50 largest Malaysian companies (by market capitalisation) with regard todisclosures of corporate governance practices. In addition Maybank was also conferred the KLSE Corporate GovernanceAward 2003 for the Finance Sector and Malaysian Business Corporate Governance Merit Award 2003.

The Board of Directors sits at the apex of the Group’s governance structure. The Board functions as the ultimate authoritywith regard to the supervisory oversight of Management, ensuring compliance with the Malaysian Code Of CorporateGovernance (the Code)/regulatory requirements, managing risks and strategic direction setting. To ensure the Board is ableto discharge these responsibilities effectively, it is assisted by a number of dedicated and specialised internal forumscomprising of the Nomination, Strategic Planning, Audit, Credit Review, Risk Management, Employee Share OptionScheme (ESOS) and the Remuneration and Establishment Committees.

MENU

39

Mayb

ank 2004 A

nn

ual R

epo

rt

The more specific responsibilities of the Board as spelt out in its Terms Of Reference include thefollowing:

• Reviewing and approving the strategic business plan of the Group as a whole as well as thatof the individual operating units. This encompasses the annual budget, medium term corporateplan, new investments/divestments as well as mergers and acquisitions.

• Overseeing the conduct of the business to ascertain its proper management including settingclear objectives and policies within which senior executives are to operate.

• Identifying and approving policies pertaining to the management of all risk categories includingbut not limited to credit, market, liquidity, operational, legal and reputational risks.

• Reviewing all material credit approvals made by Management, which are deemed to havematerial impact on the risk profile of the Group.

• Approving credit facilities falling under the category of Policy and Director-related loans. Theformer is defined as credit facilities that exceed exposure limits and other limits set by the Board.

• Reviewing the adequacy and the integrity of internal controls and management informationsystems, including systems for compliance with applicable laws, rules, regulations, directives andguidelines.

• Serves as the ultimate approving authority for financial expenditure that exceeds the authorisedlimits of Management.

MENU



The Board of Directors enjoys independent and unrestricted access to all levels of Group Management personnel at alltimes. In this regard, in order to keep the Board continuously updated on Management’s initiatives and decisions, theminutes of the principal Management platform namely, the Group Management Committee (GMC), is tabled at the Boardwhile a copy of all the papers submitted to the GMC is also made available to the Chairman.

The directors are allowed to seek external advice on any issue if they deem it necessary.

In keeping with the objective of fostering a performance based work culture, members of the Board are subject toindividual performance audits by the Nomination Committee which also assesses the effectiveness of the Board as a whole.

Effectiveness of the Board.

1. Roles and Responsibilities of the Chairman and the President and Chief Executive OfficerThere is a strict and documented separation of the roles of the Chairman of the Board and the President and ChiefExecutive Officer (CEO). This distinction allows for an equitable sharing of responsibilities, accountabilities and acheck and balance proposition that entrenches the independence of the Board.

The Chairman of the Board is a non-executive and together with the rest of the Board is mainly responsible forsupervising the Group’s operations, debating and challenging Management’s strategic initiatives and for ensuring that theGroup is in compliance with all the tenets of corporate governance that it subscribes to. He also serves as the mainliaison point between the Board and Management and is responsible for building consensus among the Board members.

Specifically he chairs the meetings of the Board, EGM and AGM, the Strategic Planning, Credit Review Committeesand the Boards of a number of key subsidiaries.

The President and CEO is primarily responsible for managing the day to day operations of the Group includingensuring the implementation of remedial measures to address identified shortcomings and acting as its officialspokesman. He is also entrusted with charting the longer direction of the Group for consideration by the Board andits consequent implementation. The position also requires the incumbent to identify and groom individuals undersuccession planning.

He chairs the Group Management, Asset-Liability Management, IT Steering and Credit Committees.

He is measured, evaluated and rewarded by the Board on the basis of the Balance Scorecard, which in turn is aimedat improving shareholder value.

MENU

41

Mayb

ank 2004 A

nn

ual R

epo

rt

2. Board Structure and CompositionThe Board currently comprises eleven (11) members, including six (6) independent non-executive directors. The number of executive directors must not exceed 3 or 40% of thetotal Board membership, whichever is lower. The overall size of the Board is designed to ensureits effectiveness.

3. Appointments to the BoardThe directors are drawn from very diverse backgrounds and with differing skill sets so as tofacilitate content input from a wider perspective given the evolving nature of the operatingenvironment.

Appointments are based on the recommendation of the Nomination Committee which employsa definitive set of selection criteria encompassing the minimum qualifications specified by theregulatory authorities and the required skills as dictated by the business environment and thelonger term direction of the Group. It also includes an assessment of financial or commercialrelationships with the Group that might lead to conflict of interests.

Every three (3) years the members are required, by rotation, to offer themselves for re-election.

The profile of the current directors is given on pages 10 to 15.

MENU



4. Directors’ and Senior Executives’ CompensationThe Chairman draws a monthly stipend in addition to meeting allowances as well as annual fees. Non-executivedirectors are entitled to annual fees and meeting allowances. They are also eligible to participate in the share optionsscheme of the Group.

The Nomination and Remuneration and Establishment Committees make recommendations to the Board regarding theappointment and remuneration of the executive directors. In arriving at its findings, the Committee takes into accountthe need to “attract and retain” and at the same time, strive to link the rewards to corporate and individualperformance as embodied in the individual scorecards.

At the senior management level, the objective in general terms is for basic salaries to reflect a premium over therelevant market median. Basic remuneration/benefit packages are determined by their placement in the different jobbands. Share option entitlements (which have to be paid for) and bonus payments, are linked to specific and pre-determined performance hurdles as stated in the balance scorecard of each individual.

5. Directors TrainingIn compliance with Bursa Malaysia’s Listing Requirements, all members of the Board have attended the requiredmandatory accreditation-training program.

Board Procedures

The Board meets monthly with performance review being a permanent feature. Board meetings are structured around apre-set agenda. Matters for deliberation are circulated in advance of meeting dates to allow for sufficient time to digestand understand the issues/contents.

Minutes of all the Board committees as well as those of the executive level Group Management Committee which meetstwice a month, are also tabled at the Board.

Board deliberations can be characterised as being healthy and uninhibited. Management also uses the forum to obtainpreliminary views and guidance regarding specific issues or planned courses of action.

For the year under review, all directors had complied with the minimum attendance requirement as stipulated by BankNegara Malaysia and Bursa Malaysia.

MENU

43

Mayb

ank 2004 A

nn

ual R

epo

rt

Ownership Structure and Transparency

The shares of Maybank are quite widely held and the shareholding structure is transparent. Thereis full disclosure of the shareholding in the Annual Report and on request. In terms of identifyingmajor and beneficial shareholders, shareholdings are disaggregated and disclosed up to 0.2 percent.Shareholdings of directors are also disclosed.

The usual disclosure norm covers identification of the top thirty (30) shareholders, the number ofshares held, the percentages held by the identified parties and distribution of shareholdings by size.

The share structure exists entirely of common shares and there are no classes of common shares.

There is strict separation between management control and ownership control as evidenced by thelatitude given to Management in running the Group and the pure market oriented approach takenby Management.

There are no foreign shareholding limits and the company’s Memorandum and Articles ofAssociation does not have any explicit provision to thwart acquisition.

As part of the effort to further improve the liquidity of shares and to broaden the foreignshareholder base, Maybank is planning to implement an American Depository Receipt Program inthe course of Financial Year 2005.

Shareholders/Stakeholders’ Rights and Investor Relations

Maybank recognises the need to keep informed all stakeholders of all major developments on a timelyand effective basis. In addition to the mandatory public statements through Bursa Malaysia on theoccasion of releasing the quarterly financial results as well as other corporate disclosures, interestedparties can also access corporate information through the website www.maybank2u.com. Corporateinformation is also made available on request at the company’s headquarters.

There are well established and tested procedures pertaining to the convening and conduct ofshareholder meetings. These steps which govern the holding of the AGM and EGMs are spelt outin the Memorandum and Articles of Association and are in compliance with Bursa Malaysia’s ListingRequirements and the Company’s Act.

MENU



In line with the commitment to shareholder democracy, shareholders vote on all material decisions including the electionand removal of directors, mergers, acquisitions and disposals, appointment of Auditors, dividend payments andamendments to the Memorandum and Articles of Association. There are no substantive majority voting requirements thatinterfere with shareholders rights.

The senior management also regularly meets with investment analysts/fund managers and Rating Agencies to updatethem on developments within the Group and to share the broad direction and strategies. These expressions are alsoarticulated through media interviews and active participation in investment forums in the leading financial centres. Theprincipal objective is to provide a direct communication channel for all stakeholders.

Financial Reporting and Disclosure

The financial statement of Maybank is produced and audited according to the Malaysian Accounting Standards Board, whichis in line with International Accounting Standards (IAS). The depth of coverage and the accompanying explanatory notes allowfor easy comprehension of the company’s financial health, main sources of revenue both by business lines and geography,the principal cost drivers and to link business strategy with results. Related party transactions are also detailed out.

As Maybank operates in a number of foreign jurisdictions, the financial treatment of the collated accounts has alwaysbeen based on the more stringent requirements.

In addition to the Annual Report, Maybank also publishes its unaudited results at quarterly intervals and this is accessibleat the company’s web-site. The Management also hosts separate debriefing sessions for the Press and Investment Analystsat the time of releasing the half year and final year results.

During the financial year, Maybank did not incur any penalties from the regulatory authorities for erroneous or latesubmission of statutory reports.

Risk Management and Internal Control

The company’s Risk Management and Internal Control are stipulated on pages 88 and 47.

MENU

45

Mayb

ank 2004 A

nn

ual R

epo

rt

Audit Process

The accounts of Maybank are audited by Messrs. Ernst and Young. The auditors are appointed byshareholders on an annual basis upon recommendation by the Audit Committee and the Board ofdirectors. The Audit Committee which has a majority of independent non-executive directors,oversees the audit process.

The external auditors finalise their audit plan each year in consultation with the Audit Committee. Theyare invited to attend meetings on special matters, when necessary. In addition, the Audit Committeealso meets the external auditors without the presence of Management, at least once a year.

In the case of the financial year, other than statutory audit, the external auditors provided taxadvisory services. The amount of fees is disclosed in note 29 of the accounts.

Conclusion

Having reviewed the governance structure and practices of Maybank and the requirements underthe Code dated January 2001, the Board considers that, with the exception of the disclosure ofindividual directors’ remuneration, it has, throughout the financial year, complied with the rest ofthe best practices as set out in the Code. The Board is of the opinion that, while individual directors’remuneration is not disclosed, information provided on page 222 which is made in accordance withBursa Malaysia’s Listing Requirements, is sufficient to provide an understanding and basis forevaluation of Maybank’s corporate governance.

This statement is made in accordance with the resolution of the Board of Directors dated 30 August 2004.

Tan Sri Mohamed Basir bin AhmadChairman of the Board

MENU

Codeof Ethics and Conduct


Maybank, as a custodian of public funds, has a responsibility to safeguard its integrity andcredibility. It is on this understanding that the organisation sets out clearly the code of ethicsand conduct for its staff. The code stipulates the sound principles that will guide all Maybankstaff in discharging their duties. It sets out the standards of good banking practice.

The purpose of the code is to:

1. uphold the good name of Maybank and to maintain public confidence in Maybank;2. maintain public confidence in the security and integrity of the banking system;3. maintain an impartial and unbiased relationship between Maybank and its customers; and,4. uphold the high standards of personal integrity and professionalism of Maybank staff.

The code stipulates that staff should not:

1. Engage directly or indirectly in any business activity that competes or is in conflict withthe Bank’s interest.

2. Misuse or abuse their positions in the Bank for their personal benefit or for the benefitof other persons.

3. Misuse information.

In addition to these, staff should:

1. Ensure the integrity and accuracy of records and/or transactions2. Ensure fair and equitable treatment in all business dealings on behalf of the Bank.3. Maintain the highest standard of service in their relationship with customers.4. Maintain confidentiality of all relations and dealings between the Bank and its

customers. However, confidential information concerning a customer may be given ormade available to third parties only with prior written consent of the customer or whendisclosure is authorised under the Banking and Financial Institutions Act, 1989.

5. Maintain the integrity of the banking system.6. Manage their financial matters well and not subject themselves to pecuniary

embarrassment.7. Observe and comply with laws and regulations relating to the operations of the Bank.

MENU

Responsibility

The Board acknowledges their overall responsibility for the Group’s internal

control environment and its effectiveness. It is of the view that the internal control

framework is designed to manage rather than eliminate the risk of failure to

achieve the policies, goals and objectives of the Group. It can therefore only

provide reasonable assurance and not absolute assurance of effectiveness against

material misstatement of management and financial information or against

financial losses and fraud.

The Board is additionally of the view that the system of internal control in place for the year underreview is sound and sufficient to safeguard shareholders’ investments, customers’ interests and theGroup’s assets. The system of internal control which has been instituted throughout the Group isupdated from time to time to suit the changes in the business environment.

The role of Management is to implement the Board policies, procedures and guidelines on risk andcontrol by identifying and evaluating the risks faced and design, operate and monitor a suitablesystem of internal controls to manage these risks.

Key Processes

The key processes that the directors have established in reviewing the adequacy and integrity of thesystem of internal control, are as follows:-

• The Group’s risk management principles, policies, procedures and practices are systematicallydocumented and made available to all employees.

• Under the Group’s Broad Principles for the Management of Risks, Risk Taking Units, at the firstlevel, are responsible for the day-to-day management of risks inherent in their business activities.Group Risk Management, at the second level, is responsible for setting the risk managementframework and developing tools and methodologies for the identification, measurement,monitoring, control and pricing of risks. Complementing this, at the third level, is Internal Audit,which provides independent assurance on the adequacy and effectiveness of the riskmanagement framework. Further information on Group Risk Management, which includesOperational Risk Management, Credit Risk Management and Market Risk Management ishighlighted on pages 88 to 103. 47

Mayb

ank 2004 A

nn

ual R

epo

rtStatement

on Internal Control

MENU

Statementon Internal Control


• The Board receives and reviews regular reports from the management on the key operating statistics, legal andregulatory matters. The Board approves appropriate responses or amendments in the Group policies.

• The Group’s annual business plan and budget are submitted to the Board for approval. In addition, variances betweenactual and targeted results are also reviewed on a monthly basis. This would allow for timely responses and correctiveactions to be taken to mitigate risks.

• The Group’s Internal Audit reports to the Audit Committee of the Board (ACB), performs regular reviews of thebusiness processes to assess the effectiveness of the control environment and highlights significant risks impacting theGroup. The scope and frequency of the audit activities are reviewed and endorsed by the ACB based on the principlesof risk based audit methodology and regulatory requirements. The ACB has active oversight on the internal audit’sindependence, scope of work and resources.

• The ACB regularly reviews and holds discussions with management on the actions taken on internal control issuesidentified in reports prepared by Internal Audit, the external auditors, regulatory authorities and the management.

• Management, through the Internal Audit Committee, is tasked to follow up and monitor the status of actions onrecommendations made by the internal and external auditors. In addition, it can direct investigations in respect of anyspecific instances or events, which are deemed to have violated internal policies pertaining to confidentiality orfinancial impropriety, which has material impact on the Group.

MENU

49

Mayb

ank 2004 A

nn

ual R

epo

rt

• There is a clearly defined framework of empowerment approved by the Board for acquisitionsand disposals of property, plant and equipment, awarding tenders, application for capitalexpenditure, writing off operational and credit items, approving general expenses includingdonations as well as operational excesses.

• The professionalism and competence of the Group’s human resources is maintained through arigorous recruitment process, training and re-skilling programs and a performance appraisalsystem. There are proper guidelines drawn-up by the Group for recruitment, promotion andtermination of staff.

Review of the Statement by External Auditors

The external auditors have reviewed this Statement on Internal Control for the inclusion in theannual report for the financial year ended 30 June 2004.

The external auditors conducted the review in accordance with the “Recommended Practice Guide5: Guidance for Auditors on the Review of Directors’ Statement on Internal Control” (“RPG 5”)issued by the Malaysian Institute of Accountants. The review has been conducted to assess whetherthe Statement on Internal Control is both supported by the documentation prepared by or for theDirectors and appropriately reflects the processes the directors had adopted in reviewing theadequacy and integrity of the system of internal controls for the Group.

RPG 5 does not require the external auditors to consider whether the Directors’ Statement onInternal Control covers all risks and controls, or to form an opinion on the effectiveness of theGroup’s risk and control procedures. RPG 5 also does not require the external auditors to considerwhether the processes described to deal with material internal control aspects of any significantmatters disclosed in the annual report will, in fact, mitigate the risks identified or remedy thepotential problems.

Based on their review, the external auditors have reported to the Board that nothing had come totheir attention that caused them to believe that the Statement on Internal Control is inconsistentwith their understanding of the process the Board has adopted in the review of the adequacy andintegrity of internal control of the Group.

MENU

BoardCommittees


The Board has set up several Board Committees to assist the Board perform

its functions and currently, there are 7 Board Committees, each having its

own supportive role. To keep the Board informed of matters tabled and

discussed at the respective Board Committees, the confirmed minutes of each

meeting of the Board Committees are tabled to the Board at each Board

meeting. This is also to provide the opportunity to members of the Board

who do not sit as members of the respective Board Committees to raise any

query or view on the matters discussed by the said Committees.

Composition:

Each Board Committee consists of a mix of the executive and non executive directors and in most Committees, theindependent non-executive directors form the majority, with most Committees headed by independent directors asChairman, as seen in the Audit, Remuneration, Nomination, Risk Management and the Employee Share Option Scheme(ESOS) Commitees.

It is the practice of the Board and the Board Committees that a member abstains from any participation and decisionwhich involved him, to avoid any conflict of interest.

Assessment of Effectiveness:

An assessment of the Board as a whole and also of the individual directors are made on an annual basis and in assessingthe performance of both the Board and the individual directors, the effectiveness of the Board Committees together witheach director’s contributions to the Board in various aspects including his skills and experience are considered as well. Theinitial assessment of individual directors which started previously at Maybank level has been extended to the whole Group.

The directors self assess themselves, followed by assessment by the Nomination Commitee and further discussion on theirperformance at the Board level. Feedbacks on the directors’ performance are conveyed to the directors after the assessment,to enable them to improve their performance. Feedback is also given to Bank Negara Malaysia for their information.

MENU

Strategic PlanningCommittee

BOARD OFDIRECTORS

Employee Share OptionScheme Committee

Credit ReviewCommittee

Risk Management Committee

Audit CommitteeNominationCommittee

Remuneration and Establishment

Committee

51

Mayb

ank 2004 A

nn

ual R

epo

rt

Strategic Planning Committee

The Committee is chaired by the Bank’s Chairman himself and 3 of the non-executive directors sit onthis Committee, which meets at least every 2 months and is responsible for recommending to the Boardthe Group’s strategic direction, the main operating plans and business strategies of Maybank Group aswell as the capital allocation by business segments, apart from being responsible for the managementand policies relating to reputation, risk branding, public reputation as well as the Bank and the Group’simage. This Committee also monitors the progress and benefit realisation of the key strategic initiativesundertaken by the Group and the capital adequacy of the Bank and the subsidiaries.

Credit Review Committee

This Committee meets on a weekly basis to review loan applications above a certain level whichhad been approved by the Credit Committees (CC) of the Management, which CC also meets ona weekly basis, to consider loan applications. This Committee has the right to veto any decision ofthe Credit Committee if necessary. The Committee also looks into any required change in creditpolicy for recommendation to the Board.

The Committee also reviews the total lending cap of companies which are granted facilities by theBank and makes its necessary recommendation to the Board.

MENU

BoardCommittees


Audit Committee

Headed by an independent non-executive director as Chairman, this Committee meets at least once a month. Details ofthe Committee’s composition, roles and responsibilities and number of meetings held during the financial year ended 30 June 2004 are provided at page 56 to page 59 of this Annual Report.

The composition of this Committee is reviewed every 3 years and it has been the Bank’s practice to review and changethe Chairman of this Committee every 3 years. The review also covers the Committee and members’ performance andthe terms of membership of this Committee.

Employee Share Option Scheme (ESOS) Committee

With the expiry of the previous scheme on 22 June 2003, a new scheme was launched with effect from 26 August 2004for a period of 5 years, as approved by the shareholders at the Extraordinary General Meeting (EGM) on 11 August 2004.

This Committee assists the Board in determining all questions of policy and expediency that may arise in theadministration of the ESOS and generally exercise all acts that are necessary to promote the best interest of the MaybankGroup. The Committee oversees the Management’s implementation of the scheme. The Committee decides inter alia onthe offer, offer date, eligibility, basis of allotment, the exercise of the option, the administration, modification to thescheme, dispute and termination issues in relation to the scheme, in line with the ESOS By-laws. Appeals by staff onESOS issues are also looked into by the Committee.

Risk Management Committee (RMC)

The Committee is responsible for formulating policies, identifying, measuring, monitoring, managing and controlling themarket risk, liquidity and operational risks. The responsibilities include ensuring policies and limit structures for Maybank.

This Committee meets monthly and also oversees the risk management in Maybank and the Group, details as per page 88 to page 103 herein.

The members of the Committee, numbers of meetings held up to 30 June 2004 and their attendance being as follows:-

Name of members Independent/non-independent No of meetings and attendances

Raja Tan Sri Muhammad Alias Independent non-executive 10/10

Mr. Teh Soon Poh Independent non-executive 10/10

Haji Hashir bin Abdullah Independent non-executive 8/8(appointed as a memberof RMC wef 28.8.2003)

Dato’ Mohd Hilmey bin Mohd Taib Non-independent non-executive 1/1(retired as a member

of RMC wef 12.10.2003)

MENU

53

Mayb

ank 2004 A

nn

ual R

epo

rt

Nomination Committee

The Board delegates to this Committee the process for assessing existing directors and identifying,nominating, appointing and orientating new directors and thereafter makes the necessaryrecommendation to the Board. The Committee also recommends to the Board the directors to beappointed to any of the Board Committees. This Committee performs on Group basis andcontinuous to ensure that a mix of skills and experience within the Group is maintained.

In line with the Code of Corporate Governance for reviewing of directors’ skills and experience, theCommittee looks into the effectiveness of a director’s contribution to the Board. Review ofassessment of the Board’s performance and the individual director’s performance are first discussedby this Committee prior to dicussion at Board level. The assessment is to upgrade the effectivenessof Maybank Board and the Boards of subsidiaries. The Committee also recommends to the Boardmeasures to be taken in situations where there are areas of conflict of interest with the directors.

This Committee meets as and when required. The members of the Committee, numbers of meetingsfor the financial year ended 30 June 2004 and their attendance being as follows:-

Number of meetings Name of members Independent/non-independent and attendances

Tan Sri Mohamed Basir bin Ahmad Non-independent non-executive 1/1 (Ceased to be Chairman of REC wef 28.8.2003)

Dato’ Richard Ho Ung Hun Independent non-executive 1/1(Ceased as a member

wef 28.8.2003)

Dato’ Mohd Hilmey bin Mohd Taib Non-independent non-executive 1/1(Retired as a director

wef 12.10.2003)

Raja Tan Sri Muhammad Alias Independent non-executive 5/5bin Raja Muhd Ali (Chairman wef

28.8.2003)

Tuan Haji Hashir bin Haji Abdullah Independent non-executive 5/5

Encik Mohammad bin Abdullah Independent non-executive 5/5

Datuk Amirsham A Aziz Non-independent executive 4/4(Appointed as a member

wef 8.8.2003)

Datuk Abdul Rahman Non-independent non-executive 1/1bin Mohd Ramli (Appointed as a member

wef 26.2.2004)

MENU

BoardCommittees


Remuneration And Establishment Committee (REC)

Previously called the Remuneration Committee, the REC provides a formal and transparent procedure for the REC’s mainrole of recommending to the Board, in line with corporate governance, the remuneration framework/policy for thedirectors, the President and key senior management officers and in ensuring that the compensation is competitive andconsistent with the Bank and the Group’s culture, objectives and strategy.

This includes the determination of remuneration packages for executive directors, to reflect their responsibility andcommitment, based on the responsibilities undertaken and their contribution to the effective functioning of the Board.

The executive directors do not play any part in this decision making and discussions on their remuneration are heldwithout their presence. The REC also recommends to the Board all policies relating to manpower within the MaybankGroup, training programs for key senior management officers, the short and long term plan on incentives plans,performance management and management development programs.

MENU

55

Mayb

ank 2004 A

nn

ual R

epo

rt

The Committee meets every month to discuss various issues. Where necessary, special meetings arealso held. The number of meetings and attendance for the financial year ended 30 June 2004 beingas follows:-

Independent/Name of members non-independent director No. of meetings

Tan Sri Mohamed Basir Non-independent non-executive 3/3bin Ahmad (Ceased to be Chairman

of the REC wef 28.8.2003)

Dato’ Richard Ho Ung Hun Independent non-executive 3/3(Ceased as a member


Datuk Amirsham A Aziz Non-independent executive 2/3(Ceased as a member


Dato’ Mohammed Hussein Non-independent executive 2/3(Ceased as a member


Mohammad bin Abdullah Independent non-executive 9/10(appointed as Chairman


Raja Tan Sri Muhammad Alias Independent non-executive 13/13

Datuk Abdul Rahman Non-independent non-executive 9/13bin Mohd Ramli

Teh Soon Poh Independent non-executive 8/10(appointed as a member


MENU

AuditCommittee of the Board


Authority

The Board has empowered the ACB to undertake the following:

1. Investigate any activity or matter within its terms of reference.2. Promptly report to Bursa Malaysia matters which have not been resolved satisfactorily thus resulting in a breach of

the listing requirements.3. Obtain external independent professional advice, legal or otherwise deemed necessary.4. Maintain direct communications channels with external auditors, person(s) carrying out the internal audit function or

activity and with senior management of the Bank and its subsidiaries.5. Convene meetings with external auditors, without the attendance of the executives, whenever deemed necessary.

In discharging the above functions, the ACB has also been empowered by the Board to have:

1. Necessary resources which are required to perform its duties.2. Full and unrestricted access to any information and documents relevant to its activities.

MEMBERS

Size and Composition

For the financial year ended 30 June 2004 the Audit Committee of the Board (ACB) comprised the following 4 non-executive directors, 3 of whom are independent directors:

membersHaji Mohd Hashir binHaji Abdullah(Independent non-executive director)

Mohammad binAbdullah(Independent non-executive director)

Datuk Abdul Rahmanbin Mohd Ramli(Non-independent non-executive director)

chairmanTeh Soon Poh(Independent non-executive director)

MENU

57

Mayb

ank 2004 A

nn

ual R

epo

rt

Duties and Responsibilities

The duties and responsibilities of the Committee are to review and/or report to the Board ofDirectors on the following:

1. External Auditors:– The external auditor’s audit plans and scope of their audits.– Their audit report and Management letter including Management’s responses.– Recommendation on the nomination or re-appointment of the external auditor and their fees.

2. Internal Audit:– Independence and authority to carry out its work.– Adequacy of the scope of work, resources and functions of Internal Audit in relation to risk

management, internal control and governance processes.– Audit plan, programme and processes.– All audit reports and Management’s remedial actions and where appropriate to direct

Management to undertake the necessary measures.– Appointment, termination, performance and remuneration of all Internal Audit staff.

3. Financial Reporting:– Quarterly and year-end financial statements focusing on any changes in accounting policy,

significant and unusual events, compliance with applicable approved accounting standardsand other legal and regulatory requirements.

– Any related party transaction and conflict of interest situations that may arise within theBank or Maybank Group including transactions, procedures or courses of conduct that mayraise questions of management integrity.

4. Annual Report:– Audit Committee’s activities for the financial year.

Attendance at Meetings

During the financial year ended 30 June 2004, the ACB held a total of 17 meetings. The details ofthe attendance of the Committee members are as follows:

Name of Committee Member No. of Meetings attended

Teh Soon Poh 14/17

Haji Mohd Hashir bin Haji Abdullah 16/17

Mohammad bin Abdullah 14/17

Datuk Abdul Rahman bin Mohd Ramli 16/17

MENU

AuditCommittee of the Board


The executive directors and the Chief Audit Executive are invited to attend the meetings. The External Auditors, Messrs.Ernst & Young, attend meetings on special matters only when necessary. The Company Secretary, Puan Mahiram Husin,is the Secretary to the ACB.

Activities

During the year, the following activities were undertaken:

1. Reviewed the Annual Audit Plan for the financial year 2003/2004 to ensure adequate scope and coverage over theactivities of the Group.

2. Reviewed the quarterly unaudited financial results of the Bank and the Maybank Group before recommending themfor the approval of the Board of Directors.

3. 461 internal audit reports on audit assignments were tabled and deliberated.4. The ACB reviewed all the Bank Negara Malaysia Examiners’ reports and audit reports of the external auditors and

other regulatory authorities. The ACB reviewed Management’s responses to the aforesaid auditors’ and examiners’recommendations and monitor the actions taken to rectify weaknesses detected. Where necessary, the ACB had alsodirected that appropriate remedial actions be taken.

5. Deliberated the minutes of the meetings of the subsidiary companies’ Audit Committee of the Board for an overviewof the risk management and internal control systems.

6. Reviewed the financial statements and ensured that the financial reporting and disclosure requirements of relevantauthorities had been complied with.

7. Evaluated the performance of external auditor and made recommendations to the Board on their appointment,scope of work and audit fees.

8. Reviewed the quarterly audit performance reports to ensure the adequacy, performance, progress, achievement andcoverage of the internal audit functions.

9. Examined the adequacy of the skills, knowledge and core competencies of the internal auditors. This included reviewof the training programmes initiated.

10. Reviewed the related party transactions entered into by the Bank and the Maybank Group.11. Provided independent evaluation on the performance and remuneration package of all audit staff in accordance with

the requirements of Garis Panduan 1 of Bank Negara Malaysia.

Internal Audit Function

Internal audit plays a key role in assisting the ACB to oversee that Management has in place a sound system of riskmanagement, internal control and governance. Internal audit’s vision is to be the leading best practice assurance providerand value adding business partner of internal controls, risk management and governance processes committed to exceedcustomer expectations and enhance shareholder value.

MENU

59

Mayb

ank 2004 A

nn

ual R

epo

rt

As a business partner, internal audit is engaged in executing its assurance and consultative rolethrough programmed activities to review the operations of business units. Internal audit helpsaccomplish the Group’s objectives by bringing a systematic, disciplined approach to evaluate andimprove the effectiveness of risk management, control and governance processes. The selection ofthe units to be audited from the audit universe leading to the formulation of the audit plan, is ona risk based approach and in cognisance with the Group’s objectives and policies in the context ofits evolving business environment. Priority is given to areas of relatively higher risks. The audit planis reviewed and approved by the ACB. The audit reports are submitted to the ACB for their review.This enables the ACB to execute its oversight function by forming an opinion on the adequacy ofmeasures undertaken by Management.

Internal audit also plays its consultative role by reviewing and recommending improvements tocurrent risk management, internal control and governance processes, where appropriate. In addition,reviews of new business initiatives/projects are carried out through the system development processprior to implementation. As an added assurance, all new projects implemented are subjected to postimplementation reviews by internal auditors.

The internal auditing function is organised on a Group basis and provided with adequate resourcesto discharge its functions. Consistent with this approach, the internal audit function is supervisedcentrally with support from resident auditors in selected overseas locations where Maybank operatesnamely in Singapore, Philippines and Indonesia. Technical support especially in relation toinformation technology systems and developmental initiatives are centrally driven to ensureconsistency of standards and applications.

To enhance the efficiency and effectiveness of the internal audit activity, the Group has purchased anew Audit Management System from a leading audit solution provider. This new Audit ManagementSystem which is used globally would ensure the consistency of audit work processes from planning,risk assessment, audit field work and data management.

The International Standards For The Professional Practice Of Internal Auditing (SPPIA) of the InstituteOf Internal Auditors (IIA), the Practice Advisories issued by the IIA, the Guidelines On Internal AuditFunction and Bank Negara Malaysia’s Garis Panduan 10 (GP10) and Garis Panduan Insurance 13 (GPI 13) are used where relevant as authoritative guides for internal auditing procedures.

MENU

OperationsOperations ReviewReview

Household Financial Services 62

Enterprise Financial Services 68

Investment Banking 72

Insurance 74

Fund Management 78

Venture Capital 82

International Business 84

Islamic Financial Services 86

Risk Management 88

Human Resource 104

Community Relations 108

MENU

O p e r a t i o n s R e v i e w

INTRODUCTIONMAYBANK IS A DIVERSIFIED FINANCIAL GROUP WITH ACTIVITIES COVERING HOUSEHOLD AND ENTERPRISEFINANCIAL SERVICES, INVESTMENT BANKING, INSURANCE, FUND MANAGEMENT AND OTHER RELATEDACTIVITIES SUCH AS CUSTODIAL AND TRUSTEE SERVICES. IT OFFERS ISLAMIC FINANCIAL SERVICES ALONGSIDETHE CONVENTIONAL, WITH PRODUCTS RANGING FROM FINANCING, DEPOSITS, INVESTMENT ACCOUNTS ANDTAKAFUL SERVICES. AMONG MALAYSIAN BANKS, IT HAS THE LARGEST PRESENCE OVERSEAS. THIS INCLUDESNEW YORK, LONDON, PEOPLE’S REPUBLIC OF CHINA, HONG KONG SAR, SINGAPORE, THE PHILIPPINES,INDONESIA, BRUNEI DARUSSALAM, VIETNAM, CAMBODIA, BAHRAIN AND PAPUA NEW GUINEA.

MENU

63

ouseholdFinancial Services

HThe Group’s dominant position in domestic household financial services remains unmatched. The market share for total household financing, comprising mortgages, retail hire purchasefinancing and credit card receivables, was 18.6% while market share for household traditionaldeposits stood at 21.5%. The Group also has an extensive retail delivery network comprising 420sales and service outlets across the country; more than 2,000 self service terminals includingATMs; phone and internet banking facilities; as well as a full-fledged contact centre with acapability to handle both incoming and outgoing calls. Its internet banking commands a marketshare of 78% in terms of the number of subscribers.

RETAIL FINANCIAL BUSINESS

The positive consumer sentiment and stable financing rate during the last financial year provided astrong growth momentum to the Group’s domestic retail financial services. Lending for the purchase ofresidential housing increased by 12.6% to RM21.9 billion and consumption credit, excluding credit cardreceivables, grew by 10.7%. Other areas of lending, such as financing for investment in shop housesand mutual funds, recorded impressive growths, resulting in the overall domestic loan for this businesssegment expanding by 15.1%.

With excess liquidity in the market and the need to minimise the impact of negative interest carry onhousehold deposits, efforts were made to manage growth of this deposit. During the year, the growthin household deposits was 10.6% with slightly more than half of the increase coming from savingsdeposit and current accounts.

The Group continued to strengthen its presence in the payments business. Excluding commissions fromcredit card business, fee income from this business line grew by more than 40%. Foreign exchangeprofit from retail transactions, on the other hand, increased by slightly more than 50%.

The Group has an extensive retail delivery network comprising

420 sales and service outlets nationwide, more than 2,000 self service

terminals and a fully-fledged contact centre

MENU


The commendable performance of retail financial services during the period can be attributed to thefollowing three-pronged strategies:

1. Retaining and increasing the share of wallet from mass affluent and high net worth customersegments.

2. Migrating and servicing the mass market segment to more efficient delivery channels.3. Acquire new mass affluent and high net worth customers through innovative product offerings and

relationship banking.

During the year, a number of initiatives were executed and the aim was to improve further the qualityof customer service. Among those were:

1. Enhancement of internet banking security through the introduction of a Transaction AuthorisationCode (TAC).

2. Emplacement of a Branch Sales and Service System that is capable of enhancing the quality ofcustomer relationships as well as supporting customer acquisition and retention.

3. Introduction of an Asset Allocation Model that helps to align customer portfolios with theirinvestment objective and as a guide to diversifying their investments.


A number of new products were launched

and they were well received by the public.

These products include Premier Capital

Guarantee, Premier Education Plan, Premier

Personal Accident, Mayban Small Capital Trust

Fund and Syariah compliant trust funds.

MENU

65

Mayb

ank 2004 A

nn

ual R

epo

rt

Apart from these initiatives, a number of new products were launched and they were well received bythe public. These products include Premier Capital Guarantee, Premier Education Plan, Premier PersonalAccident, Mayban Small Capital Trust Fund and Syariah compliant trust funds. The features of existingproducts were also enhanced and these included mortgage financing and expansion in the number ofpayee corporations for internet banking.

CARD BUSINESS

Despite intense competition with more players coming into the industry, the Group’s cards businesscontinued to register strong growth. Credit card receivables increased by 10% to reach RM1.8 billion,thus accounting for 14.2% of the total for the whole banking system. New cards acquired rose by30% while total spending for the year recorded a 15% growth. Significant growth was also recordedin the debit card business. Debit spend for the year was 83% higher than the corresponding periodlast year and with this achievement, the Group was in the lead position with over 30% market share.Merchant sales recorded the highest achievement with 22% growth against the industry’s 18%. Withthis performance, the market share for merchant sales strengthened from 23% to 24%.

During the year, the Group successfully launched the Maybank American Express Card, which is targetedat the higher end of the market segment. Product promotions and awareness were stepped up tostrengthen the Group’s position in this business. In addition, two new card acquisition channels wereemplaced and an incentive package was introduced to enhance the attraction of the Group card products.

MENU


AUTOMOBILE FINANCING

The Group’s automobile financing business comprises retail hire purchase, business hire purchase, floorstocking and block discounting. About 95% of the business was from retail hire purchase. The Group is amajor player in the hire purchase sector, commanding a 13.7% market share. The Group has a dominantposition in block discounting and floor stocking with market shares of 65.5% and 24.8% respectively.

In line with the strategy to diversify the base of the business, the Group continued to expand its offshorebusiness. The loan base of the Singapore operation’s automobile financing increased by 38.7% whilst the basefor the Philippines grew by 96.4% to RM88 million. Taking into account a 3% annual growth from thedomestic operations, total loans of the Group’s automobile financing increased by 11% during the year.


MENU

67

Mayb

ank 2004 A

nn

ual R

epo

rt

In the face of intense market competition and realising the

need to fully capitalise on Group synergy, the business of

automobile financing will be merged into the commercial

bank’s legal entity effective 1 October 2004.

During the year, initiatives concerning product features, service standards and business processes were alsoundertaken. With regard to products, reward programs for all newly approved hire purchase customerswere introduced. These programs were developed in cooperation with the Group’s strategic partners. Inorder to improve further the service standard to customers, a mechanism to shorten the turnaround timefor approvals and disbursements was emplaced at all automobile finance service outlets.

In the face of intense market competition and realising the need to fully capitalise on Group synergy, thebusiness of automobile financing will be merged into the commercial bank’s legal entity effective 1 October 2004. Notwithstanding this, no major changes will be made to the existing business process.The unit will still be responsible for end-to-end processes relating to the business, which includesmarketing, processing, approval, disbursement and securities. In fact, preserving the benefits of the existingprocesses and having the advantage of a focused business as well as competitive funding cost, thisbusiness unit will be able to compete in the market more effectively.

MENU



MENU

69

nterpriseFinancial Services

E

Riding on the back of an improving economy, the Enterprise Financial Services Group registeredfavourable growth in both assets and market share. Our strategy in achieving growth is to tapon our existing large customer base as well as acquiring new customers.

The Enterprise Financial Services Group’s loans growth for the year was largely driven by the Small andMedium Scale Enterprises (SME) segment, which grew by RM2.3 billion or 15.2%. The growth in thecorporate business segment was subdued due to the substantial reduction in Foreign Direct Investmentsand the continuing shift from conventional financing to capital market financing by large corporates totap on the improved equity market conditions as well as the lower funding costs. Despite the slowgrowth, outstanding loans by large corporates, which stands at RM32.0 billion, still commands a marketshare of 31.0%.

In line with the Government’s efforts to strengthen the competitive fibre of SMEs in Malaysia, theEnterprise Financial Services Group has put in place a well-structured system of management of SMEsthrough its 38 Business Centres strategically located throughout the country. With this extensive reach,the outstanding SME loan base of RM20.0 billion represents a market share of 19.7% and constitutes25.0% of the Bank’s total loans.

Complementing the 38 Business Centres are 15 Trade Finance Centres (TFCs) with dedicated salesexecutives focusing on servicing our customers’ trade financing needs. Revenues from trade financingexpanded significantly with a growth of 34.4% while market share of the trade finance business grewfrom 23.0% to 25.0%. The sterling performance is a reflection of the success of the Trade FinanceNew Operating Model whereby a specialised Trade Processing Centre acts as a central hub handling allprocessing, hence freeing the TFCs to focus on sales.

Enterprise Financial Services Group registered favourable

growth in both assets and market share. Our strategy in

achieving growth is to tap on our existing large customer

base as well as acquiring new customers.

MENU


Revenues from trade financing expanded significantly with a growth

of 34.4% while market share of the trade finance business grew

from 23.0% to 25.0%. The sterling performance is a reflection of

the success of the Trade Finance New Operating Model.

Our support to the SMEs must not be solely gauged by theamount of financing which we have disbursed. At the sametime, we have teams of specialist Account Managers trainedto focus on this sector and to customize our solutions tothem. Turnaround time for loan processing through toapproval and disbursements were also improved with processre-engineering and the setting of benchmarks under ServiceLevel Agreements.

Recognizing the differing financial requirements of ourcustomers in different industries, we have implemented severalfinancial packages to meet these specific needs, such as theVendor programmes for the automotive industry, furnitureindustry, petrol distribution sector, oil and gas industry and ITindustry. Each financing package offers competitive pricingand flexibility in meeting the customers’ needs.


MENU

71

Mayb

ank 2004 A

nn

ual R

epo

rt

Maybank is the top lender among participating financial institutions for special loan schemes managedby Credit Guarantee Corporation, such as the New Principal Guarantee Scheme, Direct AccessGuarantee Scheme, Flexi Guarantee Scheme and Small Entrepreneur Guarantee Scheme. As at end June2004, we have granted RM8.5 billion under the various special loan schemes.

Enterprise Financial Services Group regularly holds dialogue sessions with Trade Associations and thevarious Chambers of Commerce to exchange ideas and forge stronger business partnerships.Participation in exhibitions and sponsorships of events related to the development of SMEs are alsoother areas of emphasis. During the year, we participated in a total of 11 exhibitions.

As the large corporations are increasingly tapping the debt market for alternative funding, EnterpriseFinancial Services Group worked closely with our Investment Banking Group to provide solutions forthese customers’ financing requirements. Resulting from this collaboration, Aseambankers was involvedin a number of debt market exercises, which totaled RM8.6 billion during the year.

With the emergence of e-trading, the business world has become a borderless global village wheredistances and time are no longer barriers. Realizing this, the Group is giving added emphasis to the e-commerce platform through the provision of enhanced cash management services via the introductionof Maybank2e.net. The basket of services available includes, among others, payments, collection,liquidity management, treasury services and trade finance processing.

MENU


MENU

73

nvestmentBanking

IThe business environment for investment banking activities during the last financial year wasmixed. The domestic bond market was erratic with yields on 5-year MGS climbing to a four-year high towards the end of the financial year. Despite this development, raising fundsthrough bonds issuance remained an attractive option. Aseambankers managed to retain itssecond position with a 21% market share in PDS issuance. The company acted as Joint PrincipalAdvisor and Joint Lead Arranger for the issuance of RM5.6 billion nominal value Istisna’medium term notes programme for SKS Power Sdn Berhad.

All the elements to support a strong performance of the equity market were present during the year.The upward trend of the economic growth, low interest rate, high domestic liquidity and stable politicalclimate provided a strong boost to the market resulting in the Kuala Lumpur Composite Index rising by18.5%. For the merchant banking business, this development translated into an increased flavour forInitial Public Offerings and fund raising exercises. Between July 2003 and June 2004, Aseambankersundertook seven new listings and 23 capital raising exercises.

The Group’s stock broking business recorded a strong growth performance, securing an average marketshare of 10.8%. This achievement can be attributed to various strategic initiatives emplaced in the lastthree years, which transformed the Group’s stock broking entity into an efficient business unit. Theseinitiatives covered the streamlining of its workforce and capitalising on technology to improve workprocesses. In addition, research capability was further enhanced. The outcome of this effort was seenwhen Mayban Securities was ranked third in the Edge Broker’s Poll 2003 for the category of the mostimproved local research house.

With the objective of improving further the service standard, a new public gallery was opened inAugust 2003. This gallery is located at Dataran Maybank and serves as a one-stop centre for retailclients of the company.

Between July 2003 and June 2004,

Aseambankers undertook seven new

listings and 23 capital raising exercises

MENU



MENU

75

nsuranceI

For the year ended June 2004, the Group’s insurance business recorded a combined gross

premium of RM1.3 billion. More than three-quarters came through the Maybank Group’s

network – a testimony to the success of the bancassurance business model adopted by the Group.

While this was an important threshold for the Group’s insurance business – crossing the RM1 billion

mark for the first time - the most significant achievement was the improvement in the industry ranking.

The life insurance unit, Mayban Life climbed up the life insurance industry ranking to No. 2 from

No. 5 the year before in terms of new business premium, and doubled the market share for new

business to 14% from 7% previously. The star contributor was the tremendous success of the Premier

Capital Guarantee (PCG) products. Mayban Life collected some RM600 million in new business premium

for PCG. At the close of the financial year, Mayban Life’s assets under management had grown to

RM2.6 billion, which is comparable to a sizeable asset management company.

The Group’s insurance business

recorded a combined gross

premium of RM1.3 billion

MENU

Mayban General Assurance is now the

most profitable company in the general

insurance industry in terms of

underwriting margins.



It was also a great year for Mayban General Assurance, the Group’s general insurance unit. Solid growth

in business was recorded for the household segment and medium scale enterprises. The major contributor

to the growth was the Premier Personal Accident (PPA) product, where Mayban Assurance is now ranked

No. 2 in the Personal Accident market segment of the industry. As a result of various profit-driving

initiatives such as portfolio restructuring, prudent business selection, and improvement in claims and

customer services, Mayban General Assurance is now the most profitable company in the general

insurance industry in terms of underwriting margins and ranked No.2 in terms of absolute operating profit.

The achievement of Mayban Takaful, the Group’s family and general takaful unit, was indeed promising.

During the financial year, Mayban Takaful experienced a tremendous growth, at 160%, in gross

contribution to reach RM42 million from RM16 million the year before. This business unit is the one

to watch, as the rapid pace of growth is expected to continue for many years.

MENU



MENU

79

undManagement

F

The Maybank Group recorded significant progress in becoming a major player in the fundmanagement activities. Its subsidiary, Mayban Investment Management, is now among the topthree private fund management companies in Malaysia. With a fund size of RM3.94 billion oran increase of 38.7%, its market share improved to 13.7% from 10.5% in June 2003. Clientsinclude pension funds, insurance companies, corporations, institutions, unit trust funds, highnet worth individuals and most recently, foreign institutions from the Middle East.

The Group also strengthened its presence in the unit trust business. During the year, total assets underthe management of Mayban Unit Trust Berhad grew from RM1.68 billion to RM2.2 billion reflecting astunning growth rate of 30.6% against the industry’s 18.77% for the period under review. Over thesame period its market share rose from 6.39% to 7.03%.

One of the principal focus of the Group’s unit trust business was the introduction of a comprehensivesuite of new and innovative funds to cater for a wide spectrum of investors with different investmentobjectives, risk appetite and at various stages of their life cycles. In line with this focus, three newproducts were introduced, namely:

1. Mayban First Capital Guaranteed Trust Fund: Launched on 19 August 2003, the closed-end Fundwas designed for investors who want to participate in the growth of the Malaysian equity markets,but at the same time, posed no risk to their initial capital at the end of the investment tenure.At its IPO period, more than RM110 million was subscribed to the fund.

Mayban Investment

Management is among the top

three private fund management

companies in Malaysia

MENU


Total assets under the management of

Mayban Unit Trust Berhad grew from RM1.68

billion to RM2.2 billion.

MENU

81

Mayb

ank 2004 A

nn

ual R

epo

rt

2. Mayban Smallcap Trust Fund: Launched on 3 March 2004, the Fund sits on the opposite end ofthe risk spectrum. It is an aggressive equity based fund whose objective is to achieve medium tolong-term capital growth by investing primarily in securities listed on Bursa Malaysia with marketcapitalisation of not more than RM750 million. The Fund received overwhelming response and wasfully subscribed within the first three days of the launch. The size was increased by another RM150million and was again fully taken up within days of reopening. In total, more than RM241 millionwas collected during the IPO period.

3. Mayban Dana Arif: Launched on 27 April 2004 with an approved fund size of RM200 million at50 sen per unit, it is the Company’s first Islamic Bond Fund and the objective is to provide a steadyappreciation of value and a regular income flow.

In an effort to enhance its service delivery, Mayban Unit Trust Berhad is embarking on a multi millionringgit fully integrated unit trust system where straight-through processing will be a standard feature.The system is expected to bring substantial benefits to investors who for the first time will be able tomake “on-line and real time” enquiry on the status of their investments.

MENU



MENU

83

entureCapital

V

During the financial year, Mayban Ventures focused on surfacing Private Equity (PE) deals

comprising pre-IPO, mezzanine and strategic start-ups in bigger size. Nonetheless, monitoring

the existing portfolio of technology companies remained a major activity during the expansion

and exit stages of such companies. A follow-on fund of RM100.0 million, The Inflexion Fund,

was marketed to a select group of investors to profit from the growth and in particular the

eventual IPOs of these companies on the MESDAQ.

PE investment and management have been Mayban Ventures core capabilities since incorporation,

demonstrated by the successful IPOs of 10 companies. Capitalizing on the Group’s network of lending

and hence investment opportunities, the Company continues to offer well-structured deals to a growing

base of institutional investors.

Private Equity investment and management

have been Mayban Ventures’ core capabilities

since incorporation demonstrated by the

successful IPOs of 10 companies

MENU



MENU

85

nternationalBusiness

IMaybank’s biggest overseas presence is in Singapore. Its profile in the country has been rapidlytransformed over the years due to the concerted efforts to enhance its presence. Maybank’spresence is now more visually apparent due to the strategic placement of its 27 servicelocations and the contributions to major national community initiatives.

With the Qualifying Full Bank (QFB) licence awarded by the Monetary Authority of Singapore, Maybankrapidly extended its footprint by introducing five offsite ATMs and participated in Singapore’s first QFBshared ATM network. For the convenience of customers, two branches (Ang Mo Kio and MarineParade) were re-located to the densely populated heartland and dedicated the Robinson Road Branchin the Central Business District to busy executives for their share financing needs.

With these initiatives, Maybank has made good progress in Singapore. Its retail customer base increasedby 46% while consumer loans grew 2.5 times and now make up 37% of Maybank Singapore’s totalloan portfolio. The Automobile Finance business has achieved growth of more than 3.9 times, whilethe credit card base has grown by 83%. Maybank is now distributing more than 100 funds with atwo-fold increase in assets under management in Singapore. Likewise, the enterprise business,comprising more than 60% of Maybank Singapore’s total loan portfolio, out-performed the market andgrew 10% year-on-year while trade finance grew 30%.

With regard to operations in the emerging markets, asset creation has been realised in a selective andmeasured manner. Expansion of asset bases in markets such as Brunei and Papua New Guinea continueto be reflective of the relatively limited size of such economies. In the more advanced markets, thecapital returns parameters for the overall loans and investments markets have experienced significantre-alignment due to the considerable demand for credit opportunities by financial and non-financialinstitutions alike.

Maybank Group’s international network

now spans across 12 countries

MENU



MENU

slamicFinancial Services

I

Maybank has been recognised by the market as having the largest pool of Islamic bankingassets worth RM20.9 billion. It has established itself as the Group with the biggest share ofIslamic banking business in the market. With profit after tax increasing strongly by 15.6%, ithas proven itself as an increasingly important component of the Group’s business. This is in linewith the Central Bank’s target of expanding Islamic business so that by the year 2010, Islamicbusiness contributes 20% of the banking system.

With Islamic financing at Group level growing strongly at 25.9% during the year under review, the profitcontribution from Islamic banking grew from 14.6% to 15.5% of the total pre-tax profit of the Group. Inrecognition of this, Maybank was presented “The Excellent Performance Award 2003/04” by theAssociation of Islamic Banking Institutions Malaysia. We were also awarded the “Best Provider of IslamicFinancial Services in Asia" and "Best Islamic Wholesale Financial Services Provider” by Euromoney Magazine.

During the period under review, key growth areas in financing shifted considerably from the long termhouse financing to the shorter-term commercial/business and trade financing. This is in line with theneed to create a more balanced portfolio, both in terms of sector and exposure to long-term risks.

As a means to ensure sustainable growth in the future, Maybank is looking at diversifying its sourcesof growth via the introduction of new financing and deposit products. One such product is the VariableHouse Financing in line with the guidelines issued by the Central Bank early this year. Personal financingas well as auto-financing will also receive more attention as these financing instruments couldimmensely contribute towards improved earnings and sectoral diversification.

Maybank has been recognised by the

market as having the largest pool of

Islamic banking assets worth RM20.9 billion

MENU

INTRODUCTIONIN THE COURSE OF CONDUCTING ITS BUSINESS, MAYBANK GROUP IS CONSTANTLY ASSUMING DIVERSE ANDCOMPLEX RISK TYPES SUCH AS CREDIT RISKS, MARKET RISKS, LIQUIDITY RISKS, OPERATIONAL RISKS AND OTHERS.

AT MAYBANK GROUP, WE CONTINUOUSLY BENCHMARK OURSELVES AGAINST INTERNATIONAL BEST PRACTICESIN RISK MANAGEMENT. THE GROUP’S RISK MANAGEMENT FRAMEWORK INVOLVES RISK MANAGEMENTPRINCIPLES, ORGANISATION STRUCTURES, RISK POLICIES, RISK IDENTIFICATION, QUANTIFICATION ANDMONITORING AND CONTROL PROCESS.


MENU

89

iskManagement

RRISK MANAGEMENT STRUCTURE

In response to the complex risk types inherent in the Group’s activities, the following risk managementstructure is in place to ensure adequate and effective oversight:

Internal AuditCommittee

Credit Review CommitteeRisk Management CommitteeAudit Committee

Board Of Directors

CreditCommittee

Chief Risk Officer

Operational Risk ManagementMarket Risk ManagementCredit Risk Management

Risk Management ensures that

core risk policies of the Group

are consistent, sets the risk

tolerance level and facilitates the

implementation of an integrated

risk-adjusted measurement

framework

MENU


The Board of Directors is responsible for ensuringthat risk management policies are established forthe various categories of risk and is alsoaccountable for ensuring effective functioning ofthe internal control mechanisms.

The Board is assisted by the following boardcommittees in the discharge of the aboveresponsibilities:

Risk Management Committee (RMC)Credit Review Committee (CRC)Audit Committee (ACB)

Risk Management comprises Credit RiskManagement (CRM), Market Risk Management(MRM) and Operational Risk Management (ORM)units, all reporting to the Chief Risk Officer.

While risk taking units have the primaryresponsibility for managing specific risks assumedby them, Risk Management provides the centralresource for the identification, assessment,quantification, aggregation, monitoring and controlof the risks taken by the Group as a whole.

Risk management activities pertaining to internalcontrol and audit programs are under the purviewof the Chief Audit Executive.

Maybank Group views compliance with laws,regulations, and standards as an integral part of allits business processes. An independent complianceunit within Risk Management has been set up toundertake the centralised oversight of thecompliance functions in the Group.


RISK MANAGEMENT PRINCIPLES

The 7 Broad Risk Management PrinciplesThe risk management approach is premised onthree lines of defence – risk taking units, riskcontrol units and internal audit.

The risk taking units are responsible for the day-to-day management of risk inherent in their businessactivities while the risk control units are responsiblefor setting the risk management framework anddeveloping tools and methodologies for theidentification, measurement, monitoring, controland pricing of risks. Complementing this is theinternal audit, which provides independentassurance of the effectiveness of the riskmanagement approach.

Risk Management provides risk oversight for themajor risk categories including credit risk, marketrisk, liquidity risk, operational risk and otherindustry-specific risks.

Risk Management ensures that the core riskpolicies of the Group are consistent, sets the risktolerance level and facilitates the implementationof an integrated risk-adjusted measurementframework.

Risk Management is functionally and organisationallyindependent of the business sector and other risktakers in the Group.

The Maybank Board, through the Risk ManagementCommittee, maintains overall responsibility for riskoversight within the Maybank Group.

Risk Management is responsible for the executionof various risk policies and related decisions of theBoard.

MENU

1st Line of Defense

Business Group

IndependentRisk Management

Function

Internal AuditFunction

2nd Line of Defense 3rd Line of Defense

Capability Groups

Risk

Man

agem

ent

Repo

rtin

g

Board of Directors

The 3 Lines Of Defences

Day to daymanagement of risk

Risk oversight,policies and framework

Independent Insurance

Senior Management

91

Mayb

ank 2004 A

nn

ual R

epo

rtRisk Awareness Communication ProgramMaybank Group’s risk management mission is toprovide the appropriate framework andmethodologies for the effective management ofenterprise-wide risks in the Group in order to protect and enhance shareholder value. This mission is supported by the followingstrategic objectives:

• Cultivate a Risk Aware culture in theMaybank Group, to empower every staffmember with the capability to identify andmanage risks whenever possible.

• Benchmark Maybank Group’s riskmanagement practices to international bestpractices, commensurate with MaybankGroup’s scale and complexity of business.

• Lead in risk management benchmarks set byBank Negara Malaysia and other relevantauthorities.

• Provide for an efficient asset-l iabil itymanagement.

• Provide for a risk-based capital structure soas to efficiently allocate capital according todegree of risk.

Maybank Group had embarked on the RiskAwareness Communication Program (RACP) in2003. The objective of this program is to raisethe level of risk awareness of all staff membersacross the Group, especially at the operatinglevel so that all staff members are aware of thecrucial role that they can play in the identificationand management of risks.

MENU


The RACP is an on-going program and is tied in with various initiatives under the Integrated RiskManagement Project currently undertaken by the Bank.

The RACP is aimed at enhancing the risk-aware culture within the Maybank Group, a culture that isflexible and proactive in meeting the changing demands and expectations of our customers.

RISK DEFINITIONS

Operational risk is the risk of loss resulting from inadequate or failed internalprocesses, people and systems or from external events. This definition includeslegal risk, but do not include strategic and reputational risks.

OPERATIONALRISK

LIQUIDITY RISK

MARKET RISK

CREDIT RISK


Credit risk arises as a result of customers or counterparties not being able to orwilling to fulfill their obligations to repay their loans or settle financial contracts.

Market risk encompasses price and interest rate risks, all of which are inherentin the ordinary course of the Group’s business. Price risk is the risk to earningsas a result of adverse changes in interest rates, foreign exchange rates,equity/commodity prices and their respective correlations and volatilities.

Funding liquidity risk is the risk that the Bank is unable to raise funds to meetits payment obligations on settlement date or in the event of a margin call.

Market liquidity risk arises from adverse market conditions that do not allowa market participant to withdraw or hedge their positions easily. The adversemovement in market conditions could be caused by the change in marketsentiment or due to a specific event or a series of events.

MENU

93

Mayb

ank 2004 A

nn

ual R

epo

rt

CREDIT RISK MANAGEMENT

Management Of Credit Risk

Identification Risk identification performed prior to launching of newproducts/financing packages

Products/financing packages proposal paper prepared by businessunits and reviewed/signed-off by respective risk control units

Policies/limits tabled to the Management and Board for endorsementand approval respectively

Measurement Maybank Group Credit Risk Rating System (comprising a set ofinternally developed statistically-based rating tools, which includesthe Expected Loss framework) used to grade Maybank Group’scommercial and corporate borrowers

Integrated Retail Scoring Solution to be used for grading of retailborrowers

Risk-based authority limit framework leveraging on Maybank GroupCredit Risk Rating System and Expected Loss Framework to beadopted

Monitoring & Control Credit risk concentration limits and related lending guidelines inplace, covering:

• Country limit• Sectoral limit• Maybank Group Single Customer Limit• Bank and counterparty limits• Product limit

Regular review of risk exposures by RMC

Independent Pre and Post-Approval Evaluation of credit proposals

Post-mortem review of delinquent loans to identify weaknesses incredit processing/approval/monitoring processes

Periodic audits by internal and external auditors

In-house training for credit personnel leading to attainment ofCertified Credit Professional qualification

MENU


Credit Risk Management (CRM) is responsiblefor formulation and implementation of the creditrisk management framework for the Group,which encompasses the management/enhancement of asset quality, formulation/reviewof credit policies and the oversight of creditportfolio risk. CRM also sets and reviews variouscategories of credit risk concentration limits suchas single customer group, economic segment,product type, bank and country limits.

In line with Maybank Group’s strategy to integratethe management and control of credit risks on agroup-wide basis, the Maybank Group Core CreditPolicies have been established and endorsed bythe RMC to ensure consistency of key credit riskmanagement practices across the Group.

Risk Measurement – CRM has developed a statistically-based internal credit risk rating system basedon the Expected Loss framework which comprises 3 components as follows:

Expected Loss Probability Exposure At Loss Given = X X

(EL) Of Default (PD) Default (EAD) Default (LGD)

The PD is calibrated based on the Group’s internalhistorical data over a full economic cycle from themid-1980s.

The internal r isk rating system provides aconsistent and objective approach in thedifferentiation of enterprise borrowers’ risk profileand serves as a value-added tool in the creditdecision-making process and the development ofrisk-based credit policies and processes.

Risk Identification – In line with Bank NegaraMalaysia’s Best Practices for the Management ofCredit Risk, the Group has set up a productapproval program to ensure that all risks inherentin new product/financing packages and relatedbusiness activit ies are identif ied with riskmitigation measures put in place prior to theintroduction of the product/financing package.

All new products to be introduced are required tobe signed-off by various risk control unitsincluding Risk Management, Legal, Accountingand Internal Audit before submission to theRMC/Board for approval.

Risk Monitoring And Control – CRM actsindependently in the monitoring of compliance bybusiness units to internal credit policies andlending guidelines/various credit concentrationlimits and regulatory requirements, where relevant.

CRM adopts a policy-driven approach inmanaging the development of the Group’s loanportfolio and thus engages a strategy toproactively diversify the Group’s portfolio riskthrough close monitoring and management of the


MENU

95

Mayb

ank 2004 A

nn

ual R

epo

rt

credit concentration risks in business segments,customer groups, economic sectors, loanmaturities, loan sizes, geographical locations,security types, product types and off-balancesheet transactions.

The Group’s credit concentration limits aredesigned to identify and analyze risks at an earlystage and to enable the setting of appropriatecredit limits for monitoring and control purposes.Where appropriate, such limits are periodicallyreviewed/revised and submitted to theManagement/Board for endorsement andapproval, respectively.

Monthly reports on asset quality covering theoverall credit risk exposure of the Bank/Group(including off-balance sheet items) are submittedto the RMC/Board. These reports also includeanalysis of the overall composition and quality ofthe various credit portfolios and highlights anysensitivities or risk concentrations.

The Bank’s credit approval process is in line withBank Negara Malaysia’s requirements, whichemphasize on independent credit r iskmanagement. Within the Bank, pre-approvalevaluation and post-approval review ofperforming loans are conducted by personnelindependent of business units. Post-mortemreview of non-performing loans is conductedand where necessary, credit policies areenhanced accordingly.

In line with Bank Negara Malaysia’s requirements,Maybank Group had launched the CertifiedCredit Professional (CCP) Sponsorship programsince 2001 to prepare its credit personnel forCCP certification.

Moving ForwardTo further enhance the credit risk managementprocess, CRM is currently pursuing the followinginitiatives:

• A group-wide automated credit risk ratingsystem equipped with robust financialspreading software that enables targetmarketing, financial benchmarking, cash-flowmodeling, financial projections, portfoliomonitoring and portfolio stress testing

• Statistically-validated retail scorecards basedon the historical experience of the Group tobe developed for the housing loans, autoloans and credit card businesses

• Collateral Management System forconsolidation of all collateral information toprovide a holistic portfolio view on collateralsand to facilitate timely monitoring andreporting of collateral positions

• Portfolio Management System to support theautomation of group-wide portfolioaggregation in line with Basel II definitions,enhanced limit monitoring and to be used asthe platform for estimation of EAD and theIRB Advanced approach

MENU


MARKET RISK MANAGEMENT

Management Of Market Risk

Identification Risk identification performed prior to launching of new products

Product proposal paper prepared by business units and reviewed/signed-off by respective risk control units


Measurement Rate Sensitive Gap Analysis

Earnings-at-Risk (EaR) Analysis

Duration Analysis and PV01 Measures

Value-at-Risk (VaR) Analysis

NII Simulation under various interest rate and balance sheet scenarios

Independent revaluation of risk exposures

Stress testing to assess the impact of extreme but plausible events

Back testing to validate the risk models used

Monitoring & Control Regular review of risk exposures by Senior Management & ALCO

Application of various risk limits

Daily/periodic compliance checking and management reporting

Escalation of policy/limit exceptions

Periodic review of risk policies/limits

Periodic audits by internal and external auditors

Market Risk Management (MRM) is responsible for the formulation and implementation of themarket risk management framework for the Group. This task includes development and implementationof consistent risk management methodologies and pricing models to identify, measure, monitor andcontrol market risk, in conjunction with other risk management units such as CRM and ORM.

The Asset & Liability Management Committee (ALCO), an executive committee chaired by thePresident/CEO, is responsible for the development and implementation of broad strategies and policiesfor managing the Bank’s Balance Sheet and associated market/liquidity risks. MRM providesinformation/advice/reports to ALCO and serves as the secretariat to the Committee.


MENU

97

Mayb

ank 2004 A

nn

ual R

epo

rt

Risk Identification – It is the Group’s policythat new products and variations of existingproducts must be vetted through the NewProduct Approval Programme and signed-offprior to product launching. In this regard, theBank is also guided by the respectiveguidelines issued by Bank Negara Malaysia,such as the Guidelines on New ProductApproval Requirements and MinimumStandards on Risk Management Practices forDerivatives.

All new products to be introduced are required tobe signed-off by various risk control units includingRisk Management, Legal, Accounting and InternalAudit before submission to the ALCO forendorsement and to the RMC/Board for approval.

Risk Measurement – The primary purpose of riskmeasurement is to inform Senior Management andthe risk taking units on the nature and quantumof risk exposures, to enable informed decisions onrisk-taking activities to be made. Maybank Grouphas adopted various tools/techniques to measurethe risk exposures in various treasury and corebanking products/instruments. These tools/techniques include:

Rate Sensitive Gap Analysis – The ratesensitivity gap is used to measure the repricingmismatch between assets and liabilities. TheBank’s assets, liabilities and off balance-sheetinstruments are stratified into maturity segmentsbased on the instruments’ next repricing ormaturity dates. Based on interest rate outlook,these gaps are adjusted by changing the repricingprofiles through the use of financial derivatives,funding strategies and assets repositioning.

Earnings-at-Risk (EaR) Analysis – EaRmethodology is used to estimate the potentialloss of earnings resulting from marketmovements over a specified period of timewithin a specified probability of occurrence,under normal business situations. MaybankGroup monitors the interest rate risk of itsbanking book by performing EaR analysis forboth the short and long-term outlook. The short-term analysis primarily focuses on the impact ofextreme, but plausible events, on the Bank’sbudgeted net interest income. The long-termanalysis primarily addresses the fixed rateportfolio, including the Islamic portfolio.

Duration Analysis and PV01 Measures – The Bank also uses the concepts of duration andmodified duration as the foundation to measure the sensitivity of specific/multiple products that willhave differing interest rates and residual maturities.

Value-at Risk (VaR) Analysis – VaR methodology is used to estimate the potential loss of valueresulting from market movements over a specified period of time within a specified probability ofoccurrence, under normal business situations. At Maybank Group, VaR is applied and aggregated overmultiple products for each risk taking unit. Maybank has adopted the following VaR parameters:

Attributes Selected Parameters

VaR Methodology Historical simulation

Confidence Level 99%

Holding Period 10 days

Observation Period 1 year

MENU


Simulation – Maybank employs analytical tool tosimulate statistically reliable distribution of resultsto measure net interest income sensitivity basedon differing assumptions ranging from interestrate movements to targeted monthly newbusiness volume. In addition, variousmeasurements of performance are also forecastedusing the projected balance sheet profile, gapreports and profit & loss statements.

To supplement the market risk managementprocess, stress testing is performed at periodicintervals to assess the impact of extreme, butplausible events, on the Bank.

The Bank is also at the early stages of conductingback testing to assess the reliability and validity ofthe risk models used.

Marking-to-Market – For revaluation purposes,risk exposures are marked-to-market on aconsistent basis at specified intervals, inaccordance with the respective product policies.For added transparency, this task is performed byrisk management personnel independent of therespective risk taking units.

Risk Monitoring And Control – Riskmanagement personnel act independently inmonitoring compliance to the regulatoryrequirements and approved internal policies/l imits governing the respective products/activities. This task includes, but is not limited to,undertaking compliance reviews and preparationof daily/scheduled compliance reports for limitmonitoring and management reporting purposes.Scheduled reports on Balance Sheet profile,gap/duration analyses, market simulation analyses,

key financial performance ratios and treasuryreports are also submitted to ALCO, to providethe basis for informed decision-making.

Policy/limit exceptions, if any, are escalated to theALCO/Credit Committee and the RMC/Board, inaccordance with established policies. Whereappropriate, risk policies/limits are periodicallyreviewed/revised and submitted to theManagement/Board for endorsement and approvalrespectively.

All the above processes are subject to periodicaudits carried out by internal and externalauditors.

Moving ForwardTo further enhance the market risk managementprocess, MRM is currently pursuing the followinginitiatives:

• Upgrading of the existing scenario simulationsoftware to leverage on the Bank’s EnterpriseData Warehouse to enhance the ALMframework of Maybank Group to bring it inline with industry best practices and Basel IIrequirements

• Extension of VaR-based limits across alltreasury products

• Construction of sophisticated, scenario-typestress tests

• Enhancement of capability to analyze theresults of back-tests performed

• Automation of the computational template toincorporate the anticipated regulatory capitalcharge for market risk


MENU

99

Mayb

ank 2004 A

nn

ual R

epo

rt

LIQUIDITY RISK MANAGEMENT

Management Of Liquidity Risk



Policies/l imits tabled to the Management and Board forendorsement and approval respectively

Measurement Liquidity Framework enforced by Regulatory Agencies

Internal Liquidity Analysis with comprehensive limit structure

Concentration of Funding Sources in particular products and tenors

Stock of Liquid Assets – Quantity and Quality

Stress testing to assess the impact of extreme but plausible events

Monitoring & Control Regular review of risk exposures by Senior Management/ALCO

Regulatory Compliance

Internal policies and benchmarks

Liquidity Crisis Management

Early Warning Signals and Triggers

Mitigating Measures

Contingency Funding Plan

Liquidity Policy Statement based on Global Liquidity ManagementFramework

Periodic audits by Internal and External auditors

Market Risk Management is also responsible for the formulation and implementation of the Group’smarket risk management framework that encompasses the management of liquidity risk. Consistentmethodologies are implemented across the Group in the identification, measurement, monitoring andcontrol of liquidity risk that complement other risk management units, such as CRM and ORM.

The ALCO is responsible for the development and implementation of broad strategies and policiesfor managing the Bank’s Balance Sheet and associated market/liquidity risks. MRM providesinformation/advice/reports to ALCO and serves as the secretariat to the Committee. The monthlyALCO report contains information on the balance sheet profile, gap analysis, duration analysis,simulated projections, compliance of risk limits and performance ratios among others. These monthlyreports provide the foundation that enables Senior Management to evaluate the risk-rewardparadigm as a tool for ALCO to make strategic decisions.

MENU


Risk Identification – It is the Group’s policythat new products and variations of existingproducts must be vetted through the NewProduct Approval Programme and signed-offprior to product launching. In this regard, theBank is also guided by the respective guidelinesissued by Bank Negara Malaysia, such as theGuidelines on New Product ApprovalRequirements and Minimum Standards on RiskManagement Practices for Derivatives.

All new products to be introduced are required tobe signed-off by various risk control units includingRisk Management, Legal, Accounting and InternalAudit before submission to the ALCO forendorsement and to the RMC/Board for approval.

Risk Measurement – The primary purpose of riskmeasurement is to inform Senior Management andthe risk taking units on the nature and quantum ofrisk exposures, to enable informed decisions on risktaking activities to be made. Maybank has adoptedvarious tools/techniques to measure the riskexposures for various treasury and core bankingproducts/instruments. These tools/techniques include:

• Regulatory Liquidity Analysis – The primarymeasure of liquidity exposure for the Bank isbased on the New Liquidity Framework (NLF)enforced by Bank Negara Malaysia. The NLFallows the Group to evaluate the timing ofcash inflows and outflows for assets, liabilitiesand off-balance sheet commitments based oncontractual and behavioral maturity profiles indifferent currencies. The Group uses behaviouralassumptions that are derived over a specifiedperiod of time within a specified probability ofoccurrence, under normal business situations,to observe the cash flow patterns of assets,liabilities and off balance sheet items thathave ambiguous or revolving maturity profile.The above methodology has been approvedby ALCO and Bank Negara Malaysia.

During the financial year, Maybank Group hadcomplied with the liquidity regulations underthe NLF.

• Internal Liquidity Analysis – Liquidityindicators and ratios are also established asinternal standards to measure the liquidityperformance of the Bank/Group. Comprehensivelimit structures and benchmarks are in place toensure that liquidity risk is maintained atacceptable levels. These policies/limits are tabledto the ALCO, for endorsement, prior tosubmission to the RMC/Board for approval.

• Concentration of Funding Sources –Maybank Group continuously exploresdifferent avenues to diversify funding sourcesboth locally and globally through a variety ofinstruments, including certificates of deposits,issuance of debt securit ies and assetsecuritisations. To avoid over concentration oncertain funding sources, a specific level ofconcentration ratio has been established andis being monitored on an ongoing basis.

• Stock of Liquid Assets – Maybank Groupclosely monitors the level of liquid asset holdingsin the form of cash and marketable securitiesthat are issued and/or guaranteed by both theGovernment of Malaysia and selected AAArated private entities. Adequate liquid assets aremaintained to ensure that these assets can beused to raise liquidity in times of need.

• Risk Monitoring and Control – Riskmanagement personnel act independently inmonitoring compliance to the regulatoryrequirements and approved internal policies/limits governing the respective products/activities. This task includes, but is not limitedto, undertaking compliance reviews andpreparation of daily/scheduled compliancereports for limit monitoring and managementreporting purposes.


MENU

101

Mayb

ank 2004 A

nn

ual R

epo

rt

Policy/limit exceptions, if any, are escalated tothe ALCO and the RMC/Board, in accordancewith established policies. Where appropriate, riskpolicies/limits are periodically reviewed/revisedand submitted to the Management/Board forendorsement and approval respectively.

Liquidity Crisis Management Framework is inplace to facilitate monitoring of the Bank’sliquidity health and to also provide a systematicapproach in handling a liquidity crisis. Theframework includes early warning signals andtriggers, mitigating measures and a contingencyfunding plan.

For overseas operations, a Global LiquidityManagement Framework has been establishedas a common platform to address variousaspects of liquidity requirements and as astandard for the management of liquidity risk inforeign currencies. Each overseas entity has inplace a Liquidity Policy Statement that clearlydefines the relevant operational processes in theday-to-day management of liquidity includingreporting structure, l iquidity risk triggers,benchmark ratios and contingency funding plan.

All the above processes are subject to periodicaudits carried out by internal and external auditors.

Key Initiatives For The YearTo enhance the asset liability managementcapabilities process, MRM had completed thefollowing key initiatives during the year:

• Implementation of an asset l iabil itymanagement application tool that leverageson the Enterprise Data Warehouse toenhance the management of interest rateand liquidity risk exposures

• Establishment of a Loan Pricing Frameworkto assist Business Units in pricing theirproducts to achieve the desired risk/rewardobjectives

Moving ForwardTo further enhance the asset l iabil itymanagement process, MRM is currently pursuingthe following initiatives:

• Enhancement of Interest Rate RiskManagement Framework – Banking Book

• Enhancement of Interest Rate RiskManagement Framework – Foreign Currencies

• Enhancement of the asset l iabil itymanagement framework to be in line withindustry best practices and Basel I Irequirements

OPERATIONAL RISK MANAGEMENT

Management Of Operational Risk




Operational risks inherent in major products, critical activities andsystems identified via tools such as Risk Profiling, Control SelfAssessment (CSA) and Key Risk Indicators (KRI)

MENU


Measurement CSA also used to measure the level of operational risk

Incident Data Collection and Measurement

KRI performance tracking

Monitoring & Control KRI also used to obtain timely information on the leading operationalrisks and drivers

Incident Data Collection and Measurement also used to monitor andcontrol operational risk profiles and material losses

Risk awareness program and training conducted

Fraud Prevention Task Force and Fraud Reporting Hotline in place

Periodic audits by Internal and External auditors

Ongoing monitoring, management & reporting of risk profiles

Enhanced Business Continuity Plan processes under development

Risk transfer mechanisms such as insurance and outsourcing used

Operational Risk Management (ORM) is responsible for the setting up and implementation of auniform and comprehensive operational risk management framework within the Maybank Group. Thisframework seeks to create a clear understanding and awareness of operational risk throughout theGroup, cultivate a self-assessment culture, maintain/analyse database on operational losses and develop,and monitor performance through, KRIs.

Maybank has employed various operational risk management tools and methodologies as part of thegroup-wide operational risk management initiatives to identify, assess and monitor operational risks. TheBank carried out ongoing review of its operational risk policies and risk appetite to ensure that suchpolicies and risk appetite are current.

On a Group-wide basis, actual losses are mapped into the 8 business lines and 7 loss event type criteriaas provided by the Basel Committee. In addition, risk-profiling exercises are conducted as part of therisk identification process. Monthly reporting of the above is carried out and forms part of the Key RiskIndicators used by Senior Management for monitoring operational risks. This report serves to identifyoperational “hotspots” and enable proactive actions to be taken to minimise risk impact.

Performance of KRI for all risk types are monitored and reported. This forms part of the operational riskmonitoring process. The above is aimed at facilitating the review and assessment of the operational riskmanagement processes and operational performances of individual business units and, at the same time,providing a group-wide perspective. KRI performances are included under the group-wide Risk Dashboardreport, which is reviewed by the RMC on a monthly basis.


MENU

103

Mayb

ank 2004 A

nn

ual R

epo

rt

Internal Control Questionnaires are implementedby risk taking units as an interim control self-assessment tool. In addition, the risk-based auditapproach adopted on a group-wide basis hasenabled the identification of key risk areaswithin the Group, which are given due priorityin terms of audit review and ongoingmonitoring.

Structured checklists are used by risk taking unitsto identify and assess the operational risksinherent in their respective operatingenvironments. The findings from such exercisesare used to develop/enhance internal controls tomanage the operational risks identified.

The Group has undertaken reviews of itsoperational r isk mitigating tools such asinsurance and outsourcing and developing itsenhanced Business Continuity Plan processes.

Key Initiatives For The YearORM had also embarked on several key initiativesto further develop/enhance its operational riskmanagement framework and tools/methodologies.These efforts are geared towards achieving agreater level of efficiency and effectiveness of theGroup-wide operational risk managementprocesses.

Operational Risk Broad Principles put in place toprovide a framework and direction for ORM,business and capability groups towards moreeffective operational risk management andreporting.

Fraud Reporting Hotline established to provideguidance that will enable staff members to raisegenuine and legitimate concerns pertaining tosuspected malpractices.

Common Risk Language compiled to achieve aconsistent understanding of the riskterminologies commonly used within the Group.

An enhanced outsourcing framework put inplace to ensure efficiency and costeffectiveness of the outsourcing processes

Monitoring of suspicious transactions usingautomated Fraud Detection & AMLA System toeffectively and efficiently reduce the operationalrisks inherent in the Bank’s businesses

The following investments to further enhancethe existing fraud prevention and detectioninfrastructure put in place for Cards Business:

• Europay MasterCard Visa (EMV) migration ofcards and terminal upgrades

• Neural Network Fraud Detection tools

• New Application Processing System

Moving ForwardTo further enhance the overall operational riskmanagement framework, ORM is currentlypursuing the following initiatives:

• Enhancement and automation of KRIperformance tracking

• Enhancement and automation of incidentdata collection and measurement

• Enhancement and automation of risk andcontrol self-assessment process

• Enhancement of Group-wide BCP processes

MENU



MENU

105

umanResource

HThe thrust of the Maybank Group Human Resource (HR) strategic initiatives continues to beaimed at strengthening the Group’s organisational capabilities to execute its business strategies.

ALIGNING BROAD-BAND JOB GRADE STRUCTURE WITH CUSTOMER-CENTRIC BUSINESS MODEL

In order to further consolidate the achievement of Maybank Group’s customer-centric business model,a new broad-band job grade structure for executives has been implemented. The new “broader-type”structure provides the best fit between the Group organisational structure and business objectives. Thenew job grade structure has been designed to differentiate the key roles and responsibilities requiredat different levels in the organisation, i.e. Key Business Drivers & Key Capability Builders, Business/Capability Strategy & Tactical Support, Sectoral Business/Capability Builders and Functional Specialists &Operational Support. The new broad-band job grade structure provides greater flexibility for careerprogression, empowers executives to take on greater challenges and responsibility for decision-makingand generates mobility of talents across sectors within the Group, thus enabling executives to developand grow in their jobs as well as to fully maximise their potential.

PLACING EMPLOYEE ENGAGEMENT AMONGST THE HIGHEST BUSINESS AGENDA

The company believes in the philosophy that a highly engaged employee will deliver high qualitycustomer services. In this regard, the Maybank Group launched an employee engagement survey, asa baseline measure on key levers such as leadership and managerial effectiveness, culture and sense ofpurpose, orientation to work and performance, customer centricity, performance based rewards, careerplanning and development, effective and timely communication as well as work environment. Anemployee engagement index as part of the key performance indicators adopted at the Group and atthe Business and Capability sectors will place employees’ commitment amongst the highest businessagenda at every level in the organisation.

Maybank Group Human Resource

strategic initiatives are aimed at

strengthening the Group’s

organisational capabilities to

execute its business strategies

MENU


GETTING RESULTS – A NEW APPROACH TO MANAGING EMPLOYEES’ PERFORMANCE

A new performance management system focused on the ‘What’, i.e.achievement of business results, and the ‘How’, i.e. demonstration ofMaybank Group Leadership Competencies, was implemented Group-wide.The new Balanced Scorecard approach has effectively provided a clear line-of-sight between corporate goals and employees’ Key PerformanceIndicators. A performance planning process at the beginning of eachfinancial year provides a clear understanding of performance expectationsvia a target setting challenge process at the top management level andfurther cascaded down to employees within each business/capability sector.The performance planning process ensures performance targets are inalignment with the strategic intent as well as keeps vertical and horizontalalignments in focus. In order to ensure sustenance of high performance, amulti-rater or a 360˚ feedback mechanism as a means to measure theGroup’s Leadership Competencies, or the ‘How’ as an integral part of thenew performance management system, will be put in place.

LINKING REWARD TO PERFORMANCE

The overall compensation and reward philosophy and strategy of the Group have been continuously reviewedand redesigned to ensure a sustainable competitive edge in attracting, retaining and motivating our people. To drivebusiness performance, various incentive plans and programs have been designed and tailored to the differentbusiness segments of the Group. Programmes implemented in the year included incentive plans for sales executives,call center executives, treasury dealers, securities dealers, investment banking frontline executives as well as a newvariable bonus plan for the Group.

LAYING THE FOUNDATION FOR THE CULTIVATION AND NURTURING OF FUTURE LEADERS

In the area of leadership development, driven by the need to inventorise talents within the Maybank Group,“Programme Bridge” was initiated to determine the demand (quantity of mission critical positions) and supply (thequality of available talents) of leaders as a basis to select and develop future leaders of the Group to ensurecontinuous succession of key talents.

These initiatives have laid the foundation for the strategic leadership development of the Group. In order to sustainlong-term achievement, the leadership assessment and development processes have been institutionalised as anintegral component of the succession planning system to ensure that the demand for mission critical positions willbe adequately supplied with high calibre resources having leadership qualities.


MENU

107

Mayb

ank 2004 A

nn

ual R

epo

rt

The transformation of HR’s capability from

administrative to strategic intensified with the

introduction of “HR2u”, an employee self

service system. Supported by web technology,

the self-service concept provides delivery of

on-line, real-time HR Services.

IMPROVING SPEED TO COMPETENCY AND MASS SKILL UPGRADING

The Group continues to look at ways of growing the value of its intellectual capital, developing thecritical skills that the business needs, managing its valuable organisational knowledge moreeffectively and using technology to more efficiently and effectively deliver learning anddevelopment programmes. E-learning programmes is to be increased through the deployment ofthe Learning Management System to achieve a higher speed to competency as well as to measurethe effectiveness and relevancy of learning.

TRANSFORMING HR’S CAPABILITY FROM ADMINISTRATIVE TO STRATEGIC

The transformation of HR’s capability from administrative to strategic intensified with theintroduction of “HR2u”, an employee self service system. “HR2u” offers various online HRservices, e.g. online claims, leave application, etc. that will ultimately raise the bar on HR operationalexcellence. Supported by web technology, the self-service concept provides delivery of on-line, real-time HR services. Internal Service Level Agreements are installed and measured to ensure the qualityof the delivery of specific HR services, e.g. talent management.

MENU



MENU

109

ommunityRelations

C

The Maybank Group continues to be cognizant of its commitment towards the

community and supports various social projects with emphasis on education, the arts,

charity, medical causes and sports. The Group engaged in various innovative

programmes that promoted the improvement in the quality of life of the individual

and community as well as encouraged respect, harmony, understanding and unity of

the various communities. During the year in review, about RM5 million was

committed to various programmes that transcend ethnic, religious, gender or class

boundaries as well as benefit a larger community in the following principal areas:

RM5 million was committed to

various programmes that

transcend ethnic, religious,

gender or class boundaries as

well as benefit a larger community

MENU


A yearly commitment of

about RM1.2 million is

made in the form of

scholarships as well as

cash incentives to

recognize those who

excel academically.

EducationEducation remains close to the heart of the Maybank Group's community programmes. A yearlycommitment of about RM1.2 million is made in the form of scholarships as well as cash incentivesto recognize those who excel academically. During the year, 55 undergraduates were awarded theMaybank Scholarship Awards to enable them to pursue their education at local public universities.Yippie Club account holders and children of staff who excelled in their public school examinationswere rewarded with cash incentives for their academic achievements. Other projects included thesponsorship of “Along”, a children’s educational television series programme aired over RTM, theannual Kem Remaja by Mayban Finance Berhad as well as contributions to the Outward BoundSchool and various schools to upgrade their facilities.


MENU

111

Mayb

ank 2004 A

nn

ual R

epo

rtArts & CultureThe Maybank Group, through its art gallery, Balai Seni, organised several significant exhibitions toprovide opportunities to new and upcoming artists to gain exposure and recognition of their talents.Exhibitions at Balai Seni have also contributed towards the country’s tourism efforts. The majorexhibition was the participation of 107 Malaysian artists in an art exhibition entitled “Images & Voicesof Independence” which was launched by Tun Dr Mahathir Mohamed, then Prime Minister ofMalaysia, to commemorate last year’s 46th Merdeka Celebrations. Four other exhibitions featuringworks by Malaysian artists both with local and international exposure were also organised. Theseexhibitions drew an interesting mix of artists from various backgrounds and States and showcasedthe diversity of styles and art genre of the Malaysian art community. Maybank’s sponsorship alsopromoted the social responsibility role of artists who have contributed part of their proceeds tocharities, among them, to The Cancerlink Foundation and the Warrior’s Day Appeal Fund. An artexhibition entitled “Feline Beauty & Grace” featuring works by two renowned Beijing artistsreinforced Maybank’s role as a cultural ambassador in countries where it has a presence. This artexhibition was held in conjunction with the 30th anniversary of diplomatic relations between Malaysiaand the People’s Republic of China.

The Maybank Group, through its art gallery,

Balai Seni, organised several significant

exhibitions to provide opportunities to new

and upcoming artists to gain exposure and

recognition of their talents.

MENU

The Investment Banking Group

contributed RM100,000 to Yayasan Budi

Penyayang for its charity and welfare

programmes for the less fortunate.

Contributions toCharity Organisations


MENU

113

Mayb

ank 2004 A

nn

ual R

epo

rt

Support for medical and health programmes receive close attention of the Maybank Group as itbenefits a larger community particularly those who are unable to afford medical treatment. TheMaybank Group Welfare Fund (MGWF) continued its annual programme, this time through thecontribution of medical equipment to Hospital Pulau Pinang for its Cardiothoracic and HematologyDepartments. To date, MGWF has contributed over RM1.6 million, especially towards medical andhealth causes. Contributions were also channeled to organisations that provide health care to thepublic, namely Tung Shin Hospital, The Thalassaemia Fund of Malaysia, the Tuanku Syed PutraDialysis Centre and Blood Bank Foundation of Kedah.

Medical andHealth Programmes

The Investment Banking Group, led by Aseambankers, contributed RM100,000 to Yayasan BudiPenyayang for its charity and welfare programmes for the less fortunate. This contribution extendsthe Group’s practice of supporting non-profit organisations that assist the less fortunate to enjoybetter social facilities or medical treatment. Such support also complements Maybank's own annualactivities of providing donations in cash and kind to the underprivileged during the festive periods.This year, the Group also extended humanitarian assistance to victims affected by the recentearthquake in Bam, Iran via a fund raising campaign initiated by the Maybank Group. With an initialpledge of RM25,000 from the Group, this fund grew to reach over RM64,000 through the generoussupport of Malaysians who contributed through our branches as well as the internet banking portalof Maybank2u.com.

MENU

Conservation andEnvironmental Protection

The Group is supporting the practice of strong ethical

policies and principles on environmental protection

through the Mayban Ethical Trust Fund (METF) which is

the first socially responsible fund that invests in

corporations that advocate such practices.


MENU

115

Mayb

ank 2004 A

nn

ual R

epo

rt

The importance that the Maybank Group placeson conservation and environmental protection isreflected through the continued sponsorship oftigers and fish owls at Zoo Negara Malaysia, ZooMelaka and Zoo Taiping as well as support to anumber of cleanliness campaigns organised bylocal authorities. In addition, the Group issupporting the practice of strong ethical policiesand principles on environmental protectionthrough the Mayban Ethical Trust Fund (METF)which is the first socially responsible fund thatinvests in corporations that advocate suchpractices. In the area of business, the bank’scredit risk policy is structured to ensure thatlending to relevant sectors require adherence toenvironmental regulations such as environmentalimpact analysis studies.

MENU

The Maybank Group continued to support

staff who represent state and national level

sporting events by providing them opportunities

for sporting as well as career excellence.


The Maybank Group continued to support staff who represent state and national level sportingevents such as hockey and badminton by providing them opportunities for sporting as well as careerexcellence. The Group also supported various national sporting events with sponsorships of overRM1.6 million. In February 2004, Maybank sponsored the prestigious cycling tournament, Tour deLangkawi at a cost of RM1 million. Maybank2u.com also inked a one-year partnership ofRM600,000 with the Badminton Association of Malaysia and was the presenter of the Thomas/UberCup 2004 Continental Stage Asia tournament held in Kuala Lumpur. Other sponsorships for sportsevents such as the Malaysian Paralympics, lawn bowling, cricket and hockey provide opportunitiesfor aspiring young sportspersons to participate in coaching clinics and tournaments to upgrade theirskills in their respective games to bring honour to the nation.

Sports

MENU

117

Mayb

ank 2004 A

nn

ual R

epo

rt

During the year in review, Maybank had also supported a major national programme that promotesnational unity and harmony via an advertising campaign targeted at reminding Malaysians of itsimportance. As the largest financial group, Maybank will continue to recognise its role andcorporate responsibilities as well as provide support where the Group has a presence. We willcontinue to focus our priority to provide assistance to the less fortunate and ensure that resourcesexpended will benefit society at large.

MENU

Maybank Group Awards


KLSE Corporate Sectoral Award inthe Finance sector of the Main Board

Malaysian Business CorporateGovernance Merit Award

MasterCard’s Asia Pacific MarketLeadership Awards: GOLD BestMasterCard Electronic Card (MaybankMoney Gift Card, Singapore)PLATINUM Best Commercial Card(Maybank Business Card, Singapore)

2003

The Banker Award for“Bank of the Year” in Malaysia

Euromoney Award for Excellence –Best Islamic Retail Bank

2004

The Banker Award for“Bank of the Year” in Malaysia

Asiamoney Award for Best Bank inCash Management in Malaysia

Euromoney Annual Islamic FinanceAward – Best Provider of IslamicFinancial Services in Asia

Euromoney Annual Islamic FinanceAward to Aseambankers MalaysiaBerhad for Best Islamic WholesaleFinancial Services Provider

Silver Award under the SingaporeH.E.A.L.T.H. Awards 2003 organisedby the Health Promotion Board, inrecognition to organisations withexcellent workplace health promotionprogrammes

Euromoney Award for Excellence toAseambankers Malaysia Berhad forbeing “Best at Islamic Bonds”

Kuala Lumpur Stock Exchange (KLSE)Corporate Excellence Award

The Edge-Lipper Award for MaybanBalanced Trust Fund (No. 1 position in Mixed Asset Balanced Funds)

2002

Global Finance Award for BestConsumer Internet Bank in Malaysia

Global Finance Award for BestConsumer Online Securities Trading in Asia Pacific

Global Finance Award for BestForeign Exchange Bank in Malaysia

Kuala Lumpur Stock Exchange (KLSE)Corporate Excellence Award

MENU

119

Mayb

ank 2004 A

nn

ual R

epo

rt

Arts Supporter Award from theNational Arts Council ofSingapore

Best of e-Commerce InteractiveMarketing Innovations – AsiaPacific ICT Awards [MSC-APICTA] 2002

2001

Best Internet ApplicationWebsite@My 2001

Global Finance – Best InternetBank in Malaysia

Euromoney Award forExcellence – Best Bank inMalaysia

The Asset Asian Awards – BestMalaysian Bank

Investor Relations Magazine Asia2001 Awards – Best InvestorRelations By A MalaysianCompany

“Risk Manager of the Year”from the Malaysian Associationof Risk and InsuranceManagement for the MaybanAssurance Berhad – UMBCInsurans Integration Team

Arts Supporter Award from theNational Arts Council ofSingapore

2000

Euromoney Award forExcellence – Best Domestic Bankin Malaysia

The Banker Award for “Bank of the Year” in Malaysia

Euromoney Awards for Excellenceto Aseambankers MalaysiaBerhad for the “Best DomesticBond House in Malaysia” and“Best Domestic Equity House inMalaysia”

Crystal Award to MaybanFinance Berhad for BestCommunity Relations from theInstitute of Public RelationsMalaysia (IPRM)

1999

Global Finance Award for BestDomestic Bank in Malaysia

Asia Industry Award to MaybanLife Assurance – Life InsuranceCompany of the Year

MENU

Maybank Group Awards


1998

Finance Asia Award for BestDomestic Commercial Bank

Asiamoney Award for being votedone of the Best ManagedCompanies in Malaysia

1997

Asian Banking Digest Award – Winner for outstanding progress inregional expansion

Asiamoney Award for the BestManaged Company in Malaysia

Asiamoney Award for the Best Bankin Currencies in Malaysia

Asiamoney Award for Malaysia’sCommercial Bank of the Year

1996

Euromoney Award for Excellence –Best Domestic Bank in Malaysia forincreasing profitability and a healthy return on equity

Asiamoney Award for being votedone of the Best ManagedCompanies in Malaysia

1995

Euromoney Award for Excellence –Best Domestic Bank in Malaysia forits impressive return on equity

Asian Institute of ManagementAward for “General Management”

1993

Euromoney Award for Excellence –Best Bank in Malaysia for itsimpressive profitability and innovation

1992

Asian Institute of ManagementAward for “Information TechnologyManagement”

1991

“IT Organisation of the Year” fromAssociation of the Computer IndustryMalaysia (PIKOM)

MENU

Awards andRecognitions

October 2003Maybank was once again awarded the Silver Awardunder the Singapore H.E.A.L.T.H. Awards 2003organised by the Health Promotion Board. TheAward gives recognition to organisations withexcellent workplace health promotion programmes.

January 2004Maybank was named the Best Provider of IslamicFinancial Services in Asia while its merchant bankingunit, Aseambankers Malaysia Berhad received theaward for Best Islamic Wholesale Financial ServicesProvider from Euromoney Magazine in its annualIslamic Finance Awards 2004.

February 2004Maybank received the KLSE Corporate Sectoral Award 2003 in the Finance sector of the Main Board.

May 2004Maybank Singapore received two awards inMasterCard’s Asia Pacific Market Leadership Awards:GOLD-Best MasterCard Electronic Card (MaybankMoney Gift Card, Singapore) and PLATINUM-BestCommercial Card (Maybank Business Card, Singapore).

121

Mayb

ank 2004 A

nn

ual R

epo

rtGroup

Corporate Highlights

June 2004Maybank received the “Malaysian Business Corporate Governance Merit Award”.

September 2003Maybank was conferred the prestigious Friend of the Arts Award by the National Arts Council ofSingapore in recognition of the Bank’s valuable contributions towards the promotion andorganisation of arts activities in the Republic.

MENU

Key CorporateEvents

GroupCorporate Highlights


July 2003Maybank sponsored the first Malay Financial Planningconference in Singapore. Mr Tharman Shanmugaratnam, Senior Minister of State, Ministry of Education and Trade andIndustry was the Guest of Honour at the conference.

Aseambankers signed an agreement to become the PrincipalAdviser & Lead Arranger for the RM1.3 billion Nominal ValueMedium Term Notes Issuance Programme with YTL PowerGeneration Sdn Bhd.

Aseambankers lead arranged the RM870.0 million Al-Bai’Bithaman Ajil Fixed Rate Financing Facility for United Engineers(Malaysia) Berhad.

August 2003Maybank signed an IT outsourcing agreement with CSC Computer Sciences Sdn Bhd and CSC ComputerServices Pte Ltd (CSC Group) to leverage on the expertise and services of a global IT service provider that willenhance benefits and value to Maybank Group and its customers. The agreement with CSC Group is for a 10-year period that involves outsourcing Maybank Group IT infrastructure services in Malaysia and Singapore.

The new Mayban Securities Gallery was officially launched by Dato’ Mohammed Azlan Hashim, Executive Chairman ofBursa Malaysia. The one-stop stock broking centre is located at MaybanLife Tower, Dataran Maybank in Bangsar, Kuala Lumpur which is the Head Office of Mayban Securities. It contains a public gallery with a large 33 sq metre paneldigital board offering maximum visibility of the stock quotes ofBursa Malaysia, including the buying and selling prices, volumetransactions and general snapshots of the day’s trading activities.

MENU

123

Mayb

ank 2004 A

nn

ual R

epo

rt

September 2003The Minister of Finance & National Economy Bahrain,His Excellency Abdulla Hassan Saif and Minister ofFinance II Malaysia, Dato’ Dr Jamaludin Jarjis jointlyofficiated the launch of Maybank Offshore BankingUnit in Manama, Bahrain.

Maybank hosted a conference on “Financial Stabilityin the Challenging Global Environment”, held inconjunction with the 44th Board of Directors meeting

and 22nd Annual General meeting of the Asian Pacific Bankers Club (APBC) in Kuala Lumpur. The conference was launched by the Governor of Bank Negara Malaysia, Tan Sri Dato’ Sri Dr ZetiAkhtar Aziz. Maybank is the only Malaysian bank in APBC. The Club was formed in 1980 to promotecooperation and cultivate friendship among member banks located in the Asian Pacific region.

October 2003Maybank held its 43rd Annual General Meeting of shareholders at Sheraton Imperial Hotel, Kuala Lumpur.

Mayban Securities acted as Joint Lead Manager forthe Domestic Institutional offering of ASTRO All Asia Networks Plc (ASTRO). ASTRO is among the 15 largest stocks on Bursa Malaysia, and has beenincluded in the MSCI and FTSE All-World indices.

August 2003 (cont’d.)Mayban Unit Trust Berhad acquired an innovative IT-based Integrated Unit Trust System (IUTS) thatwould provide real-time straight-through processingfor MUTB’s activities as well as seamless integrationwith the Maybank Group’s systems, giving a fasterturnaround time in processing a customer’sinvestment transaction.

Maybank Cards Business Group was awarded the ISO 9001:2000 Certification for “Processing of Applications and Issuance of Credit Cards”.

Maybank Group announced a 20.3% rise in net profit to RM1.996 billion for the year ended 30 June 2003 from RM1.659 billion in the corresponding period last year. Group pre-tax profit was RM2.619 billion, an 11.3% increase from the RM2.352 billion recorded last year.

MENU


December 2003Maybank Singapore launched its newly renovated Holland Village Branch on the second anniversary of its QFB status.

March 2004Maybank further extended its footprint to the densely populated Singapore heartland with our Marine ParadeBranch.

April 2004Maybank signed an agreement with Signet Share RegistrationServices Sdn Bhd for the provision of e-Dividend services via itscash management portal, Maybank2e.net. Under the agreement,Maybank would, among others, take over the the processingand issuing of dividend payment for selected companies inwhich Signet acts as registrar. Signet is one of the largest shareregistrars in the country and acts for over 200 public listedcompanies.

Maybank conducted a series of seminars on Integrated Risk Management and the implementation of Basel II inHanoi and Ho Chi Minh City, Vietnam. About 60 officials from the State Bank of Vietnam as well as variousother State-owned and private Vietnamese banks attended the seminars.


Key CorporateEvents

November 2003Maybank Singapore became the first QFB Bank to make anentry in the high density, mature housing estate of Ang MoKio. To celebrate the official opening of this branch, Maybankpartnered the Central Singapore Community DevelopmentCouncil, Yio Chu Kang Zone 4 Resident’s Committee toorganise a community Project Central Singapore Pay It Forward(PIF) 2003. PIF is about an individual doing another a favourwithout expecting anything in return.

Maybank Group announced a net profit of RM501.2 million for the quarter ended September 2003, a 31.5%increase against the RM381.1 million registered in the previous corresponding quarter ended September 2002.

MENU

125

Mayb

ank 2004 A

nn

ual R

epo

rt

April 2004 (cont’d.)Aseambankers successfully completed the corporate advisory exercise in relation to the acquisition ofBBMB Securities Sdn Bhd and the ECM Libra Group, by ECM Libra Berhad (formerly known as SouthPeninsular Industries Berhad) for an aggregate purchase consideration of RM522.29 million.

May 2004In conjunction with the Malaysia-China Friendship Year to commemorate the 30th anniversary ofthe establishment of diplomatic ties between China and Malaysia, Maybank organised andsponsored a seminar on Investment Opportunities in China. The seminar, held at Menara Maybank,Kuala Lumpur was attended by senior management of over 70 Malaysian corporations.

The Chairman of Maybank, Tan Sri Mohamed Basir bin Ahmad was conferred an HonoraryDoctorate Degree in Commercial Sciences from Oklahoma State University, in recognition of hisoutstanding contributions to the banking industry of Malaysia and support of community services.

June 2004Maybank signed an agreement with IBM Malaysiafor the implementation of the Group’s Branch Sales& Service System (BSS) to facilitate and enhance itscustomer relationship management. As the systemsintegrator, IBM would provide an integratedplatform solution to incorporate the CustomerRelationship Management, Wealth Management andPoint-of-Sales for the Insurance Fulfillment Moduleof the BSS System.

Mayban General Assurance was appointed by the Ministry of Human Resource as one of the authorised insurers to underwrite the Foreign Workers Compensation scheme.

MENU

InnovativeProducts and

Services

August 2003Mayban Securities became one of the first brokers in Malaysia to introduce a new product called T+10 marginfinancing that allows up to 10 days contra settlement. This product offers the longest settlement period toclients in the Malaysian market.

Mayban Unit Trust Berhad launched the Mayban 1st Capital Guarantee Trust Fund (M1CGTF). M1CGTF is aclosed-end unit trust fund that guarantees the investment capital as well as offers capital returns to investorsupon maturity. It has an approved fund size of RM150 million or 300 million units at 50 sen each.

September 2003Mayban Takaful launched a new product called Motor Takaful.

October 2003Maybank introduced a new payment system for corporationswhich offers them a convenient way of making their SOCSOcontributions via Maybank’s enterprise financial portal,Maybank2e.net. Maybank’s collaboration with PertubuhanKeselamatan Sosial (Social Security Organisation or SOCSO) is to provide an alternative payment channel to corporationsfor their SOCSO contributions as well as to support SOCSO’sinitiatives in promoting the usage of internet technology toincrease productivity and efficiency.

Maybank2u.com expanded its online bill payment service toinclude payee corporations from Sarawak State Governmentagencies and private organisations.

Maybank, in collaboration with Public Services Department(PSD), introduced the online repayment of study loan viaMaybank2u.com. Students with loans from PSD can now make their repayments conveniently via the internet usingMaybank2u.com, in addition to the other existing channels.



MENU

127

Mayb

ank 2004 A

nn

ual R

epo

rt

October 2003 (cont’d.)Maybank Group and TM Net Sdn Bhd introducedthe tmnet prepaid online service viaMaybank2u.com and Kawanku ATMs. The serviceallows customers to purchase tmnet prepaid reloadsand to top-up their internet access time viaMaybank2u.com and Kawanku ATMs nationwide.

Maybank Singapore introduced the first BusinessDebit Card in Asia Pacific. The Maybank Business

Debit Card, bearing MasterCard’s logo, is targeted at small business start-ups in the republic.Enterprising new entrepreneurs with no track records will now be able to own a Gold card for their business travel and entertainment needs. Those who qualify can also apply for credit facilitiesfor their working capital to jump-start their business venture.

November 2003Maybank Singapore introduced the Touch ’n GoCard Reload service at its ATMs in the republic tofacilitate the convenience of more than 55,000vehicle owners who commute via the Johor Bahrucauseway and Second Link daily.

December 2003Maybank launched the Maybank American Express Credit Card, offering the combined strength,convenience and rewards from two leading and highly reputable institutions. With the MaybankAmerican Express Credit Card, card members can obtain access to American Express’ exclusive“Membership Privileges” program as well as an array of distinctive value-added travel benefits.

Maybank Group launched Premier Education Plan, a participating endowment savings plan thatcovers all the basic needs for education purposes.

MENU

InnovativeProducts and

Services

January 2004Maybank became the first bank to issue a multi-purposeelectronic Prepaid Card in Singapore, the Maybank Money Gift card.

February 2004Maybank became the first bank in Malaysia to introduce an Autocredit Dividend Payment facility to shareholders via its enterprise cash management portal, Maybank2e.net.Companies with a shareholding structure that require dividend payment distributions to shareholders as well asregistrars managing dividend payments could now benefitfrom e-Dividend, the new web-based dividend payment service offered on Maybank2e.net.

Mayban Unit Trust Berhad launched the Premier Capital Guarantee 3 (PCG3) Fund, a specially designedclosed-end investment plan that offered a minimum guaranteed return of 15.92% at the end of its 5-year tenure period. The Fund size was RM300 million.

March 2004Mayban Unit Trust Berhad launched a new equity-based fund, Mayban SmallCap Trust Fund (MSCTF) with an approved fund size of 200 million units or RM100 million.



MENU

129

Mayb

ank 2004 A

nn

ual R

epo

rt

April 2004Mayban Unit Trust Berhad launched its first Islamic bond fund, Mayban Dana Arif (MDA), with an approved size of 400 million units or a value of RM200 million. The Fund invests in a diversified portfolio of Islamic debt securities permissible under the Syariah principles.

May 2004Mayban Unit Trust Berhad launched Premier CapitalGuarantee 5 Fund (PCG5), which offered investorsfull return on initial capital investment plus aminimum guaranteed return of 3% per annumupon maturity. PCG5 is a closed-end fund with a size of RM200 million.

Maybank became the first Malaysian bank tointroduce a new enhanced online security feature

known as Transaction Authorisation Code (TAC) for customers performing online bankingtransactions at Maybank2u.com. TAC is a unique 6-digit code that would be compulsory for specificonline transactions at Maybank2u.com in addition to the customer’s username and password.

Maybank launched an enhanced housing loan package in Brunei, called MaxiHome Plus. The enhancements comprise two new facilities – the re-mortgage and redraw facilities plus other additional benefits namely processing fee waiver and legal fee subsidy.

MENU

Rewarding OurCustomers

July 2003Maybank launched a new rewards programme for its Visa cardholders in Brunei. Under the new rewardprogramme, cardholders will collect MayDollar reward points for any purchases charged to their Maybank Visa Card. They will also enjoy free personal accident coverage or life insurance coverage amongmany other benefits.

August 2003Winners of Maybank2u.com Paybills “Be Where You Want To Be” contest and Premier Mudharabah Account (PMA) “Win A Holiday” contest received their prizes in the form oftravel vouchers worth a total of RM100,000.

October 2003Five Maybank Mastercard cardholders were rewarded with a Peugeot 307 each for winning the Maybank Credit Card“Five Reasons Why You Should Apply for a MaybankMastercard” contest. The contest offered prizes worth a total of over RM800,000. The contest held from 12 May to19 August 2003 also included a total of 216 daily prizes of a Gold Bullion Coin each worth RM1,000.



MENU

131

Mayb

ank 2004 A

nn

ual R

epo

rt

May 2004A total of RM375,000 worth of prizes werepresented to winners of the Maybank AmericanExpress Credit Card “You’ve Earned It” contest at aceremony held in Kuala Lumpur. The prizes includedan all-expense paid holiday to New Zealand, a spapackage at Banyan Tree, Maldives and a beachgetaway to Ibiza as well as state-of-the-art hightech gadgets from Sony.

June 2004Three lucky Maybank Mastercard card memberswere presented with their prizes in the form of anall expense 3 day/2 night return trip to Portugal aswell as RM10,000 credited into their MaybankMastercard accounts. The Maybank Mastercard UEFA 2004 contest offered these winners a chanceto attend the Grand Opening match of UEFA Euro2004 held in Portugal.

MENU

Rewarding OurEmployees

September 2003Staff who had served the bank for 20, 30 and 40 years were presented with Long Service Awards by Maybank as an appreciation for their dedication and loyalty.

October 2003Maybank presented 10-Year Long Service Awards to staff at a special ceremony held in Kuala Lumpur.



August 2003The Maybank Group awarded cash incentives wortha total of RM102,000 to 189 children of staff whoobtained excellent academic results in their 2002public examinations.

MENU

Reaching out to the

Community

133

Mayb

ank 2004 A

nn

ual R

epo

rt

July 2003Maybank sponsored and hosted an art exhibition by Malaysian artist Din Omar, featuring still lifepaintings that depicted aspects of Malaysianceremonies, entitled “Dokumentasi Budaya III”.

August 2003Dato’ Seri Dr Mahathir Mohamad, Prime Minister of Malaysia launched a unique art exhibition whichMaybank organised and sponsored in conjunctionwith the National Day celebration, entitled “Images& Voices of Independence”. A total of 107 artistsdisplayed artworks depicting their interpretation ofindependence. Each painting was accompanied by a poem that described the painting and itsrelation to independence.

In conjunction with the National Day, Maybank Group donated RM200,000 to the Warriors’ DayAppeal Fund (Tabung Rayuan Hari Pahlawan) to provide assistance to ex-army personnel as well astheir widows and children.

MENU

Reaching out to the

Community

September 2003Maybank was the Gold Sponsor for the SMI RecognitionAward Series 2003 organised by the SMI Association ofMalaysia. This Recognition Award aims to provide recognitionto SMIs which have achieved excellence in their industries andcontributed to the economic growth of the country.

Maybank sponsored an art exhibition of watercolour paintingsentitled “Beautiful Malaysia” by 24 Malaysian artists from theContemporary Malaysian Watercolourists Association (CMWA).

Aseambankers contributed RM100,000 to Yayasan BudiPenyayang in conjunction with its 30th anniversary celebration.The Chairperson of Yayasan Budi Penyayang, Datin Paduka SeriEndon Mahmood received the contribution at a ceremony heldat Menara Maybank, Kuala Lumpur.

October 2003In conjunction with the Deepavali celebration, Maybank Groupcontributed RM30,000 in cash and kind to threeunderprivileged homes – Rumah Karunai Illam (Kepong,Selangor), Rumah Anbu Illam (Ulu Kelang, Selangor) and Rumah Siva Sakthi Samaj (Bukit Beruntung, Selangor).

A total of 55 students pursuing their undergraduate studies at local universities were presented with the MaybankScholarship Awards worth over RM300,000. The scholarshipaward is part of Maybank’s annual commitment of over RM1.2 million in the form of scholarships and cash incentivesfor academic excellence.



MENU

135

Mayb

ank 2004 A

nn

ual R

epo

rt

December 2003Balai Seni Maybank hosted an art exhibition of 36 abstract artworks by Soh Boon Kiong, a Malaysian artist resident in Japan. Entitled “Poetic Meditation”, part of the proceeds from the sales was contributed to the Cancerlink Foundation.

January 2004Maybank sponsored RM1 million towards theMalaysia Tour de Langkawi world cycling event.

Maybank and Mayban Finance continued itssponsorship of tigers and fish owls at Zoo Negara,Zoo Taiping and Zoo Melaka at a total cost ofRM52,500 as part of the efforts in supportingconservation of wildlife in the country.

February 2004His Excellency Hu Zhengyue, AmbassadorExtraordinary and Plenipotentiary of the People’sRepublic of China to Malaysia officially launched anart exhibition, “Feline Beauty & Grace” at Balai SeniMaybank, Kuala Lumpur. The exhibition featuredmore than 100 paintings by two renowned Beijingartists An Yunji and Sun Yipeng and was held inconjunction with Malaysia-China Friendship Year tocommemorate the 30th anniversary of diplomaticrelations between the two countries.

MENU

Reaching out to the

Community

February 2004 (cont’d.)Maybank2u.com became the Title Sponsor of the Thomas/UberCup 2004 Continental Stage Asia. In addition, Maybank2u.comalso inked a one-year sponsorship of the national badmintonteam under the Badminton Association of Malaysia (BAM).

Maybank Group contributed RM21,800 in cash and kind toresidents of Selangor King George V Silver Jubilee Home,Kuala Lumpur in conjunction with the Chinese New Yearcelebration.

March 2004Maybank Group presented a cheque of RM64,666.49 in aid of victims of the earthquake that hit Bam, Iran in December2003. The amount was collected from staff and customersthrough a fund raising campaign which the Group initiatedimmediately after the disaster. It was handed over by theChairman of Maybank to His Excellency Mohammad GhasemMohebali, Ambassador of The Islamic Republic of Iran toMalaysia. Of this amount, RM25,000 was donated by Maybankfrom the funds allocated for Hari Raya contribution.

Maybank was one of the sponsors for the production of 39 episodes of a children’s educational programme,“Along” aired over RTM at a cost of RM270,000. The programme, coordinated by Permodalan NasionalBerhad (PNB), aims to inculcate an interest in Mathematics and English. Maybank had also been a sponsor ofthis programme from 1995 to 1998.



MENU

137

Mayb

ank 2004 A

nn

ual R

epo

rt

April 2004Balai Seni Maybank hosted an art exhibition entitled“Anugerah & Seni: 3 Generations of Johor Artists”by 25 Johor-born artists. Yang Amat Mulia RajaZarith Sofiah binti Almarhum Sultan Idris Shah,consort of DYAM Tunku Mahkota Johor officiallylaunched the exhibition.

June 2004The Maybank Group, through its Maybank GroupWelfare Fund (MGWF) donated medical equipmentworth RM46,900 to Hospital Pulau Pinang as partof the Fund’s annual contribution in support ofmedical causes. Approximately RM1.6 million hasbeen contributed by MGWF since its establishmentin 1990.

MENU


MENU

139

Management’sDiscussion &Analysis ofFinancialPerformance

MENU

Management’s Discussion & Analysis of Financial Performance


The investment securities portfolio of the Group rose

by RM3,572 million or 14.2%. Nearly three-quarters of

the increase came from bankers’ acceptances and

Islamic accepted bills.

ANALYSIS OF SIGNIFICANT BALANCE SHEET DEVELOPMENTS

Assets

For the financial year under review, outstanding assets at the Group and Bank levels rose by 11.5%or RM18.55 billion and 12.5% or RM15.9 billion respectively. In the previous financial year, thecorresponding growth rates were 6.8% and 8.5% respectively. Almost 90% of the Group’s growthin assets emanated from the expansion of net loans and advances, cash and short-term funds aswell as higher holdings of investment securities. As a result, the proportion of interest-generatingassets to total assets was maintained at around 94%.

Cash and Short-Term Funds

For both the Bank and Group, there was significant growth in cash and short-term funds of RM6.4billion or 38.3% and RM5.8 billion or 42.6% respectively. These increases reflect routine balancesheet management activities.

MENU

141

Mayb

ank 2004 A

nn

ual R

epo

rt

Deposits and Placements with Financial Institutions

Deposits and placements with Financial Institutions for the Group rose by RM1,034 million or18.3%. This was mainly in respect of increased placements with Bank Negara Malaysia amidst anenvironment of rising surplus liquidity in the banking system. The Group remained a net lender inthe inter-bank market.

Dealing Securities

Holdings of dealing securities at the Group level were reduced by RM477 million or 61.4%. Thiswas across most instruments.

Investment Securities

The investment securities portfolio of the Group rose by RM3,572 million or 14.2%. Nearly three-quarters of the increase came from bankers’ acceptances and Islamic accepted bills.

MENU



Loans and Advances

The Group’s net loans and advances rose by 6.4% while for the Bank, a higher increase of 8.2%was registered. On a gross basis after adjusting for loans written off and those converted toinvestment securities, the Group and Bank’s gross loans growth would have been a higher 7.0% and8.6% respectively. The Group’s overall domestic loans market share was sustained at almost 21%.

About two-thirds of the Bank’s growth in gross loans emanated from its domestic operations. Giventhe strong business franchise and the on-going focus on retail financing, growth for this segmentdoubled to 15.1% from 7.5% in the previous financial year.

At the Group level, loans granted for the purchase of residential properties accelerated to record anincrease of 12.6% from 9.6% the year before. For hire purchase and block discounting receivables,the Group achieved a growth of 10.1%. For card receivables, a growth of 10% was also recorded.

In line with the domestic Government’s efforts to increase the contribution of SMEs (small andmedium-sizes enterprises) to the economy, the Bank continued with its emphasis of lending to thiskey segment. A higher 15.1% or RM2.4 billion growth was achieved in the financial year endedJune 2004.

For the corporates, the process of disintermediation to the capital markets continued. Together withsome chunky repayments, outstanding loans to the domestic large enterprises therefore contractedby 4.7%.

In Singapore, the Bank’s gross loans expanded by 16% in SGD terms. In line with the focus onretail lending, the major portion or 57.4% of the overall loan growth came from this segment.

Growth in the Group’s Islamic financing continued strongly into the year with an expansion of 25.9%or RM3.175 billion (+38.8% from the previous year). The high growth reflects the Group’s on-goingcommitment to support the further development of the Islamic banking sector. The Group’s Islamicfinancing (including financing sold to Cagamas) now accounts for a higher 13.4% of the overall grossloans from 11.3% in June 2003. About 46% of the Group’s overall Islamic financing was formortgage lending. The Group continued to command a dominant market share of 29.3%.

MENU

143

Mayb

ank 2004 A

nn

ual R

epo

rt

Non-Performing Loans (NPLs)Gross NPLs of the Group fell by RM763 million or 5.9% to RM12.274 billion. The gross NPL ratiowas reduced to 10.3% from 11.5% in June 2003. Net NPL ratio went down further to 6.0% from 6.2% in June 2003 and 7.2% in June 2002. The banking system’s net NPL ratio was 8.4%in June 2004. The Group’s provision reserve cover before taking into consideration collateral,remained at a healthy 74.4%. This remained much higher than the rest of the banking institutions’average of 48.7%.

Life, General Takaful and Family Takaful Fund Assets

This component of the balance sheet went up by 48.6% or RM857 million to RM2.62 billion. Thesignificant growth was a consequence of the substantial sales of investment-linked products, whichis a key ‘wealth management product’ specially packaged by the Group to meet customer needs.

Total Liabilities

Outstanding liabilities of the Group went up by 11.8% or RM17.4 billion and for the Bank, by 13.0%or RM15.1 billion. For the Group, nearly 80% of the overall increase in liabilities came from customerdeposits with another 9.2% coming from obligations on securities sold under repurchase agreements.

Deposits from Customers

The Group’s customer deposits grew by RM13.8 billion or 12.6% while for the Bank, it went upby RM10.0 billion or 11.6%. The strong growth was attributable to the Group’s extensive physicalreach, comprehensive electronic channels, wide-range of services and product features as well asstrong branding. As a result, the Group managed to again achieve a high 21.2% growth forDemand Deposits. For Savings Deposits, the Group had a 10.6% growth, higher than the previousfinancial year’s growth of 7.9%.

The Group’s overall deposit funding mix continued to improve. For the domestic operations, growthfor the ‘lower-cost’ Savings and Demand deposits accounted for nearly 88% of the increase intraditional deposits. Fixed deposits now constitute only 54.9% of the Group’s domestic traditionaldeposits from 57.9% in June 2003. In contrast, the ratio for the banking system was a much higher66.6%. As in the past, this strategy to reduce funding away from the higher-cost Fixed deposits isnecessary to ensure that the Group continues to have a competitive advantage in pricing. TheGroup’s market share of domestic Savings deposits was 33.8% while for Demand deposits, themarket share was 30%.

MENU



Deposits and Placements of Financial Institutions

For the Bank, this item grew by RM1.381 billion or 10.8% and was part of routine asset-liabilitymanagement activities.

Obligations on Securities Sold under Repurchase Agreements (Repos)

For the Group and Bank, outstanding repos had increased by RM1.601 billion or 29.7% andRM1.270 billion or 25.1% respectively. This relatively high growth is testimony to the Group’s abilityto source funds at competitive rates. For the Bank, the market share of repos outstanding wasmaintained at almost 18%.

Recourse Obligations on Loans Sold to Cagamas

For the Group, this item saw a decline of RM130 million while for the Bank, it recorded an increaseof RM422 million or 18.4%. These movements were part of the Group’s routine match-fundingstrategy.

Commitments and Contingencies

This off-balance sheet item rose by 17.6% or RM13.8 billion for the Group. However, in terms ofcredit equivalent, the increase was only RM1.375 billion or 10.7%. More than two-thirds of thegrowth in notional amount of credit-equivalent was from short-term self-liquidating tradecontingencies and irrevocable commitment to extend credit with maturity exceeding one year.

MENU

145

Mayb

ank 2004 A

nn

ual R

epo

rt

ANALYSIS OF THE PROFIT AND LOSS STATEMENT

Net Interest Income

Net interest income of the Group recovered to increase by 5.2% or RM204.6 million in contrast tothe 1% decline in the previous year. At the Bank level, an almost similar growth of 5.1% wasrecorded. In both cases, the growth variances reflect the expansion in the volume of averageinterest-earning assets and partially offset by the reduction in net interest margins earned.

Pressure on interest margins continued into the year. In addition to the full-year’s adverse impact ofthe 40 basis points reduction in the base lending rates for both the Bank’s domestic operations andMayban Finance Bhd in May 2003, competitive pricing especially for retail loans was also aprominent factor.

At the Group level, net interest margin for interest-earning assets declined by 3 basis points to2.93%. In the previous year, the Group’s net interest margin had declined by 19 basis points. Forthe Bank, the decrease in net interest margin had also tapered off to 6 basis points compared withthe larger reduction of 10 basis points in the previous year. In contrast, the net interest margin ofMayban Finance Bhd had improved by 14 basis points. The strong focus placed on collections andpreventive measures had resulted in a reduction of the finance subsidiary’s NPLs.

For the Bank, measures pursued to mitigate the pressure on margins had also yielded positive results.On-going recovery and remedial management efforts for business loans, a better coordinated andcentralised collection and preventive measures undertaken for retail loans as well as a generalreduction in new NPLs meant that the Bank was able to reduce the net interest suspended by RM62.3million or 14.6%. In addition, the active management of the Bank’s Treasury fund-based activities hadalso resulted in higher net interest income earned. The much higher growth recorded for the ‘lower-cost’ Savings and Demand deposits as well as the move to recycle costlier excess Fixed deposits tounit trusts and other wealth management products meant that savings in funding cost was achieved.Finally, the Bank was also more discerning in pricing new loans, especially for the large enterprises.

Islamic Banking

Net income from the Group’s Islamic Banking operations improved by RM138.9 million or 36.3%.At the Bank level, a RM144.4 million or 32.7% increase was recorded. In both cases, the variancesclosely reflect both the Group and Bank’s growth in Islamic Banking assets. The substantial netincome growth is after setting aside RM101.6 million provision for Profit Equalisation Reserve (PER)for the Group. As required, banking institutions have to set aside the excess in distributable incomeover that paid to depositors as Profit Equalisation Reserve. For the Bank, the provision for PER madewas RM91.9 million.

MENU



Non-Interest Income

As articulated in the past, expansion of the Group’s selected non-interest income was an on-goingstrategy to diversify revenue streams. Overall non-interest income for the Group grew by RM230.7million or 14.7%. This strong achievement was despite the unexpected turn in the long-terminterest yield curve, which necessitated the Group to incur a loss on disposal of some dealingsecurities. Transactional fee income including profits from foreign exchange and net insurancepremiums collectively grew by a substantial 25.5%. Notable increases were recorded forCommissions (+RM80.8 million or 24.9%), Service Charges and Fees (+RM84.9 million or 24.9%),Share brokerage (+RM42.6 million or 165.8%) and Foreign Exchange (+RM116.4 million or 67.2%).These achievements were mainly the result of the on-going emphasis and resources committed tofurther enhance the Group’s strong payment services infrastructure, comprehensive trade-relatedservices, investment and funds management as well as bancasurrance.

At the Bank level, non-interest income (excluding dividend income received from Subsidiaries andprovision for diminution in value of investment in Subsidiaries) improved by 25.7% or RM284.3 million.

The Group’s fee income ratio improved to 28.8% from 26.9% the previous year. Excluding dividendsreceived from Subsidiaries, the Bank’s fee income ratio was a higher 30.3% from 27.1% in theprevious year.

Overhead Expenses

The Group’s overheads went up by 10.9% or RM255.2 million compared with the rise of 7.1% inthe previous year. For the Bank, a higher increase of 14.9% or RM257.5 million was registered. Incomparison, revenue (defined as net interest income, non-interest income and income from IslamicBanking Scheme operations but excluding dividends received from Subsidiaries) of the Bank rose by12.1% or RM511.3 million.

The higher growth of 14.9% in overhead costs for the Bank was mainly due to a much higher costof business acquisitions, marketing/advertising/promotional expenses as well as further investmentsmade for the future such as staff training/development and technology.

For the Group, the cost-to-income ratio went up slightly to 40.2% from 39.9% in the previous year.

MENU

147

Mayb

ank 2004 A

nn

ual R

epo

rt

Loan and Financing Loss and Provisions

Loan loss and provisions of the Group fell by 45.7% or RM416.4 million while for the Bank, itdeclined by 44.9% or RM356.8 million. In both cases, the decline was mainly due to lower specificprovision charged as well as higher bad debts recovered. For the Group and Bank, specific provisioncharged was reduced by 27% or RM251 million and 23.2% or RM174.3 million respectively. In thecase of bad debts recovered, the increase for the Group and Bank was 64.9% or RM139.7 millionand 149.2% or RM140.4 million respectively.

For the Group, specific provision charged, net of bad debts recovered, amounted to only 5.6% ofrevenue compared with 12.3% in the previous year.

As at June 2004, the Group’s outstanding general provision constituted 3.20% of net loans andadvances compared with the statutory requirement of 1.5%.

Taxation

The effective tax rate of the Group normalised to 26.5% from 21.5% in the previous year. Asdisclosed in last year’s Report, there was a significant reversal of RM187.2 million in respect of over-provision in prior years.

MENU

In preparing the financial statements, the directors have:

• considered the applicable approved accounting standards in Malaysia• adopted and consistently applied appropriate accounting policies• made judgements and estimates that are prudent and reasonable

The directors have the responsibility for ensuring that the Group and the Bank keepaccounting records which disclose with reasonable accuracy the financial position of theGroup and the Bank which will enable them to ensure that the financial statementscomply with the Companies Act, 1965 and the Bursa Malaysia’s Listing Requirements.

The directors have general responsibility for taking such steps as are reasonably open tothem to safeguard the assets of the Group and the Bank and to prevent and detect fraudand other irregularities.

The directors are required by the Companies Act, 1965 and

the Bursa Malaysia’s Listing Requirements to prepare financial

statements for each financial year which give a true and fair

view of the state of affairs of the Group and the Bank at the

end of the financial year and of their results and cash flows

for the financial year then ended.

Statement of Directors’ Responsibility in respect of the Audited Financial Statements


MENU

FinancialStatementDirectors’ Report

Statement by Directors

Statutory Declaration

Report of the Auditors

Balance Sheets

Income Statements

Consolidated Statement of Changes in Equity

Statement of Changes in Equity

Cash Flow Statements

Notes to the Financial Statements

150156

156157

158160

161162

163166

FinancialStatements

Directors’Report


The directors have pleasure in presenting their report together with the audited financial statements of the Group andof the Bank for the financial year ended 30 June 2004.

PRINCIPAL ACTIVITIES

The Bank is principally engaged in the business of banking in all its aspects which also include Islamic Banking Schemeoperations.

The subsidiaries are principally engaged in the businesses of a finance company, merchant bank, general and lifeinsurance (including takaful insurance), stock broking, discount house, leasing and factoring, trustee and nominee services,unit trust management, asset management and venture capital.

There were no significant changes in these activities during the financial year, except for certain subsidiaries as disclosedin Note 12 to the financial statements.

FINANCIAL RESULTS

Group Bank

RM’000 RM’000

Profit after taxation and zakat 2,470,087 2,092,071Minority interests (45,576) —

Net profit for the year 2,424,511 2,092,071

There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in thestatements of changes in equity.

In the opinion of the directors, the results of the operations of the Group and of the Bank during the financial year werenot substantially affected by any item, transaction or event of a material and unusual nature.

MENU

151Maybank 2004 Annual Report

DIVIDENDS

The amount of dividends paid by the Bank since 30 June 2003 were as follows:

RM’000

In respect of the financial year ended 30 June 2003 as reported in the directors’ report of that year:

Final dividend of 17% less 28% taxation, on 3,600,171,921 ordinary shares approved during theAnnual General Meeting on 11 October 2003 and paid on 30 October 2003 (including dividendamounted to RM1,310,549 paid on shares issued on the exercise of options under ESOS andbonus entitlement for shares issued pursuant to the exercise of options under the ESOS) 440,661

In respect of the financial year ended 30 June 2004:

Interim dividend of 10% less 28% taxation, on 3,600,171,921 ordinary shares, declared on20 February 2004 and paid on 29 March 2004 259,212

Special dividend of 25% less 28% taxation, on 3,600,171,921 ordinary shares, declared on20 February 2004 and paid on 29 March 2004 648,031

907,243

At the forthcoming Annual General Meeting, a final dividend in respect of the financial year ended 30 June 2004 of25% less 28% taxation on 3,600,171,921 ordinary shares, amounting to a dividend payable of RM648,030,946 (18.0sen net per ordinary share) will be proposed for shareholders’ approval. The financial statements for the current financialyear do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equityas an appropriation of retained profits in the next financial year ending 30 June 2005.

MAYBANK GROUP EMPLOYEE SHARE OPTION SCHEME (ESOS)

The Board of Directors recommended a Proposed ESOS on 1 August 2003 after the expiry of the previous ESOS on 22 June 2003. The Proposed ESOS were approved by the Securities Commission (SC) and Bank Negara Malaysia videtheir letters dated 17 November 2003 and 19 January 2004 respectively. The Bank later obtained the SC's approval videits letter dated 17 May 2004 for an extension of time until 31 December 2004 to implement the Proposed ESOS.

The Bank has subsequently on 27 May 2004 proposed to revise, inter-alia, certain terms of the Proposed ESOS to incorporaterecent changes to the SC's Policies and Guidelines on Issue/Offer of Securities and the Listing Requirements of BursaMalaysia Securities Berhad. The revised Proposed ESOS (after incorporating the proposed changes) has been approved bythe shareholders subsequent to the financial year end in an Extraordinary General Meeting on 11 August 2004.

Please refer to Note 22 to the financial statements for further details.

MENU

Directors’Report


SHARE CAPITAL

During the financial year, the Bank increased its issued and fully paid up ordinary share capital from RM3,589,464,821to RM3,600,171,921 as a result of:

i) the issuance of 9,596,000 new ordinary shares of RM1 each to eligible persons who exercised their options underthe previous Maybank Group Employee Share Option Scheme (ESOS); and

ii) a bonus issue of 1,111,100 new ordinary shares for every two (2) existing ordinary shares of RM1 each held, beingbonus entitlement for shares issued pursuant to the exercise of options under the previous ESOS.

Subsequent to the financial year end on 11 August 2004, the shareholders have approved the resolution for the increasein the authorised ordinary share capital of the Bank from RM4,000,000,000 to RM10,000,000,000 by the creation of anadditional 6,000,000,000 new ordinary shares of RM1 each.

DIRECTORS

The directors who served since the date of the last report are:

Tan Sri Mohamed Basir bin Ahmad (Chairman)Dato’ Richard Ho Ung HunDatuk Amirsham A AzizDato’ Mohammed HusseinHooi Lai HoongRaja Tan Sri Muhammad Alias bin Raja Muhd. AliMohammad bin AbdullahHaji Mohd Hashir bin Haji AbdullahTeh Soon PohDatuk Abdul Rahman bin Mohd RamliDatuk Megat Zaharuddin bin Megat Mohd Nor (appointed on 19 July 2004)Dato’ Mohd Hilmey bin Mohd Taib (resigned on 12 October 2003)

DIRECTORS’ BENEFITS

Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to whichthe Bank or its subsidiary company was a party, whereby the directors might acquire benefits by means of acquisition ofshares in or debentures of the Bank or any other body corporate, other than as may arise from the share options grantedpursuant to the previous ESOS.

MENU


DIRECTORS’ BENEFITS (CONT’D.)

Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other thana benefit included in the aggregate amount of emoluments received or due and receivable by the directors, or the fixedsalary of a full time employee of the Bank or the professional fees paid to a related party as disclosed in Notes 31 and33 to the financial statements) by reason of a contract made by the Bank or a related corporation with the director orwith a firm of which he is a member, or with a company in which he has a substantial financial interest.

DIRECTORS’ INTERESTS

According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial yearin shares of the Bank during the financial year were as follows:

Number of Ordinary Shares of RM1 Each

1 July 30 June2003 Bought Sold 2004

Tan Sri Mohamed Basir bin Ahmad 18,000 — — 18,000Datuk Amirsham A Aziz 261,000 — — 261,000Dato’ Mohammed Hussein 103,400 — — 103,400Teh Soon Poh 5,247 — — 5,247Hooi Lai Hoong 181,400 — — 181,400

None of the other directors in office at the end of the financial year had any interest in shares in the Bank or its relatedcorporations during the financial year.

RATING BY EXTERNAL RATING AGENCIES

Details of the Bank’s ratings are as follows:

Rating Agency Date Rating Classification Rating Received

Moody’s Investors Service 26 April 2004 – Long-term deposits Baa 1– Short-term deposits P-2– Subordinated long-term debts Baa 1– Financial strength rating C– Outlook Stable

MENU

Directors’Report


RATING BY EXTERNAL RATING AGENCIES (CONT’D.)

Rating Agency Date Rating Classification Rating Received

Standard & Poor’s 31 October 2003 – Long-term counterparty BBB+– Short-term counterparty A-2– Subordinated notes BBB-– Outlook Stable

Rating Agency Malaysia Berhad 20 August 2003 – Long-term AAA– Short-term P1– Subordinated bonds AA1 (Long Term)

Fitch Ratings 19 April 2004 – Long-term BBB+– Outlook Positive

BUSINESS OUTLOOK

Barring unforeseen circumstances, the Group remains well positioned to capitalise on the strong economy and to furtherexpand its business activities.

OTHER STATUTORY INFORMATION

(a) Before the balance sheets and income statements of the Group and of the Bank were made out, the directors tookreasonable steps:

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making ofprovision for doubtful debts and satisfied themselves that all known bad debts had been written off and thatadequate provision had been made for doubtful debts; and

(ii) to ensure that any current assets which were unlikely to realise their values as shown in the accounting records inthe ordinary course of business had been written down to an amount which they might be expected so to realise.

(b) At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this reportor financial statements of the Group and of the Bank which would render:

(i) the amount written off for bad debts or the amount of the provision for doubtful debts in the financialstatements of the Group and the Bank inadequate to any substantial extent; and

(ii) the values attributed to current assets in the financial statements of the Group and of the Bank misleading.

(c) At the date of this report, the directors are not aware of any circumstances which have arisen which would renderadherence to the existing method of valuation of assets or liabilities of the Group and of the Bank misleading orinappropriate.

MENU


OTHER STATUTORY INFORMATION (CONT’D.)

(d) At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this reportor the financial statements of the Group and of the Bank which would render any amount stated in the financialstatements misleading.

(e) As at the date of this report, there does not exist:

(i) any charge on the assets of the Group and of the Bank which has arisen since the end of the financial yearwhich secures the liabilities of any other person; or

(ii) any contingent liability of the Group or of the Bank which has arisen since the end of the financial year otherthan those arising in the normal course of business of the Group and of the Bank.

(f) In the opinion of the directors:

(i) no contingent liability or other liability has become enforceable or is likely to become enforceable within theperiod of twelve months after the end of the financial year which will or may affect the ability of the Groupand of the Bank to meet their obligations as and when they fall due; and

(ii) no items or transaction or event of a material and unusual nature has arisen in the interval between the endof the financial year and the date of this report which is likely to affect substantially the results of theoperations of the Group or of the Bank for the financial year in which this report is made.

SIGNIFICANT EVENTS

The significant events during the financial year are as disclosed in Note 46 to the financial statements.

SUBSEQUENT EVENTS

The subsequent events are as disclosed in Note 47 to the financial statements.

AUDITORS

The auditors, Ernst & Young, have expressed their willingness to continue in office.

Signed on behalf of the Board in accordance with a resolution of the directors

Mohamed Basir bin Ahmad Amirsham A Aziz

Kuala Lumpur, Malaysia30 August 2004

MENU

StatementBy Directors pursuant to Section 169(15) of The Companies Act, 1965


We, Mohamed Basir bin Ahmad and Amirsham A Aziz, being two of the directors of Malayan Banking Berhad, dohereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 158 to 308 aredrawn up in accordance with applicable approved accounting standards in Malaysia, Bank Negara Malaysia Guidelines andthe provisions of the Companies Act, 1965 so as to give a true and fair view of the financial position of the Group and ofthe Bank as at 30 June 2004 and of the results and the cash flows of the Group and of the Bank for the year then ended.

Signed on behalf of the Board in accordance with a resolution of the directors

Mohamed Basir bin Ahmad Amirsham A Aziz


StatutoryDeclaration pursuant to Section 169(16) of The Companies Act, 1965

I, Hooi Lai Hoong, being the director primarily responsible for the financial management of Malayan Banking Berhad,do solemnly and sincerely declare that the accompanying financial statements set out on pages 158 to 308 are in myopinion correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of theprovisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the )abovenamed Hooi Lai Hoong at Kuala Lumpur )in the Federal Territory on 30 August 2004 )

Hooi Lai HoongBefore me,

Liang Hien TienCommissioner for Oaths

MENU

157

Reportof the Auditors to the members of Malayan Banking Berhad

We have audited the financial statements set out on pages 158 to 308. These financial statements are the responsibilityof the Bank’s directors. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with approved Standards on Auditing in Malaysia. Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessing the accounting principles used and significant estimates madeby the directors, as well as evaluating the overall presentation of the financial statements. We believe that our auditprovides a reasonable basis for our opinion.

In our opinion:

(a) the financial statements have been properly drawn up in accordance with the provisions of the Companies Act,1965, Bank Negara Malaysia Guidelines and applicable approved accounting standards in Malaysia so as to give atrue and fair view of:

(i) the financial position of the Group and of the Bank as at 30 June 2004 and of the results and the cash flowsof the Group and of the Bank for the year then ended; and

(ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements; and

(b) the accounting and other records and the registers required by the Act to be kept by the Bank and by its subsidiariesof which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

We have considered the financial statements and the auditors’ reports thereon of the subsidiaries of which we have notacted as auditors, as indicated in Note 12 to the financial statements, being financial statements that have been includedin the consolidated financial statements.

We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statementsof the Bank are in form and content appropriate and proper for the purposes of the preparation of the consolidatedfinancial statements and we have received satisfactory information and explanations required by us for those purposes.

The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and in respect ofthe subsidiaries incorporated in Malaysia, did not include any comment required to be made under Section 174(3) of the Act.

Ernst & Young Gloria Goh Ewe GimAF: 0039 No. 1685/04/05(J)Chartered Accountants Partner


Maybank 2004 Annual Report

MENU

BalanceSheets as at 30 June 2004


Group Bank

Note 2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

ASSETSCash and short-term funds 4 23,009,080 16,639,629 19,527,827 13,690,606Deposits and placements with banks and

other financial institutions 5 6,686,790 5,652,279 6,129,488 7,255,939Securities purchased under resale agreements 6 733,631 585,008 722,892 582,003Dealing securities 7 299,557 776,636 163,807 96,998Investment securities 8 28,703,420 25,131,253 22,700,140 18,735,822Loans, advances and financing 9 109,070,491 102,488,470 86,718,412 80,160,354Other assets 10 2,076,427 2,048,591 827,980 740,411Statutory deposits with Central Banks 11 3,644,199 3,321,638 2,855,634 2,621,399Investment in subsidiaries 12 — — 1,869,229 1,868,713Investment in associates 13 18,907 17,301 9,740 9,740Property, plant and equipment 14 1,382,822 1,419,973 1,036,638 1,036,796Deferred tax assets 20 1,261,643 1,110,840 989,362 855,546Life, general takaful and family takaful

fund assets 49 2,620,460 1,763,779 — —

TOTAL ASSETS 179,507,427 160,955,397 143,551,149 127,654,327

LIABILITIESDeposits from customers 15 123,365,942 109,534,729 96,868,877 86,837,301Deposits and placements of banks and

other financial institutions 16 14,498,206 13,672,532 14,177,337 12,795,755Obligations on securities sold under

repurchase agreements 8(iv)/9(v) 6,988,031 5,386,572 6,338,687 5,068,578Bills and acceptances payable 3,319,429 3,150,990 5,746,147 4,092,656Other liabilities 17 3,173,396 3,097,381 1,815,950 1,647,821Recourse obligation on loans sold to Cagamas 18 6,532,046 6,661,965 2,711,118 2,289,153Provision for taxation and zakat 19 932,330 789,646 790,000 642,636Deferred tax liabilities 20 10,806 8,620 — —Subordinated obligations 21 3,004,000 3,004,000 3,004,000 3,004,000

MENU


Group Bank

Note 2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

LIABILITIES (CONT’D.)Life, general takaful and family takaful

fund liabilities 49 101,491 107,443 — —Life, general takaful and family takaful

policy holders’ funds 49 2,518,969 1,656,336 — —

TOTAL LIABILITIES 164,444,646 147,070,214 131,452,116 116,377,900

FINANCED BY:Share capital 22 3,600,172 3,589,465 3,600,172 3,589,465Reserves 23 11,023,264 9,895,768 8,498,861 7,686,962

Shareholders’ equity 14,623,436 13,485,233 12,099,033 11,276,427Minority interests 439,345 399,950 — —

15,062,781 13,885,183 12,099,033 11,276,427

TOTAL LIABILITIES AND SHAREHOLDERS’EQUITY 179,507,427 160,955,397 143,551,149 127,654,327

COMMITMENTS AND CONTINGENCIES 37 92,376,859 78,527,072 86,909,280 73,193,802

The accompanying notes form an integral part of the financial statements.

MENU

IncomeStatements for the year ended 30 June 2004


Group Bank

Note 2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Operating revenue 25 10,520,920 10,037,610 8,421,445 8,537,869

Interest income 26 7,336,284 7,204,732 5,396,471 5,265,864Interest expense 27 (3,217,078) (3,290,117) (2,401,199) (2,415,166)

Net interest income 4,119,206 3,914,615 2,995,272 2,850,698Income from Islamic Banking

Scheme operations 48(l) 521,970 383,081 334,675 252,301

4,641,176 4,297,696 3,329,947 3,102,999

Dividends from subsidiaries — — 587,867 1,237,715Other non-interest income 1,800,718 1,570,038 1,389,782 920,695

Total non-interest income 28 1,800,718 1,570,038 1,977,649 2,158,410

6,441,894 5,867,734 5,307,596 5,261,409Overhead expenses 29 (2,591,288) (2,336,117) (1,986,225) (1,728,681)

Operating profit 3,850,606 3,531,617 3,321,371 3,532,728Loan and financing loss and provisions 32 (495,362) (911,848) (437,996) (794,829)

3,355,244 2,619,769 2,883,375 2,737,899Share of results of associates 3,353 (95) — —

Profit before taxation and zakat 3,358,597 2,619,674 2,883,375 2,737,899Taxation and zakat 34 (888,510) (563,249) (791,304) (682,847)

Profit after taxation and zakat 2,470,087 2,056,425 2,092,071 2,055,052Minority interests (45,576) (59,936) — —

Net profit for the year 2,424,511 1,996,489 2,092,071 2,055,052

Earnings per shareBasic/diluted (sen) 35 67.3 55.9 58.1 57.6

Net dividends per ordinary share (sen)Paid

Interim and special dividends (sen) 36 25.2 32.2 25.2 32.2Proposed

Final dividend (sen) 36 18.0 12.2 18.0 12.2


MENU

161

ConsolidatedStatement of Changes in Equity for the year ended 30 June 2004

Non-distributable Distributable

ExchangeShare Share Statutory Capital Fluctuation Retained

Capital Premium Reserves Reserve Reserve Profits TotalRM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

GroupAt 1 July 2002 3,550,181 298,336 3,220,419 15,250 43,800 5,530,307 12,658,293

Currency translation differences — — — — (1,718) — (1,718)Adjustment to fair value of

net assets acquired — — — — — (6,235) (6,235)Goodwill on acquisition written off — — — — — (10,098) (10,098)Net accretion from increased

interest in subsidiaries — — — — — 2,038 2,038

Net losses not recognisedin the income statement — — — — (1,718) (14,295) (16,013)

Net profit for the year — — — — — 1,996,489 1,996,489Transfer to statutory reserves — — 525,788 — — (525,788) —Issue of ordinary shares

pursuant to ESOS 30,417 146,336 — — — — 176,753Bonus issue 8,867 — — — — (8,867) —Dividends (Note 36) — — — — — (1,330,289) (1,330,289)

At 30 June 2003 3,589,465 444,672 3,746,207 15,250 42,082 5,647,557 13,485,233

At 1 July 2003 3,589,465 444,672 3,746,207 15,250 42,082 5,647,557 13,485,233Currency translation differences,

representing net loss notrecognised in the income statement — — — — (3,894) — (3,894)

Net profit for the year — — — — — 2,424,511 2,424,511Transfer to statutory reserves — — 527,991 — — (527,991) —Issue of ordinary sharespursuant to ESOS 9,596 55,894 — — — — 65,490

Bonus issues 1,111 — — — — (1,111) —Dividends (Note 36) — — — — — (1,347,904) (1,347,904)

At 30 June 2004 3,600,172 500,566 4,274,198 15,250 38,188 6,195,062 14,623,436



MENU

Statementof Changes in Equity for the year ended 30 June 2004


Non-distributable Distributable

ExchangeShare Share Statutory Fluctuation Retained

Capital Premium Reserve Reserve Profits TotalRM’000 RM’000 RM’000 RM’000 RM’000 RM’000

BankAt 1 July 2002 3,550,181 298,336 2,599,225 70,447 3,860,182 10,378,371Currency translation differences,

representing net lossnot recognised in theincome statement — — — (3,460) — (3,460)

Net profit for the year — — — — 2,055,052 2,055,052Transfer to statutory reserve — — 514,000 — (514,000) —Bonus issues 8,867 — — — (8,867) —Issue of ordinary shares

pursuant to ESOS 30,417 146,336 — — — 176,753Dividends (Note 36) — — — — (1,330,289) (1,330,289)

At 30 June 2003 3,589,465 444,672 3,113,225 66,987 4,062,078 11,276,427

At 1 July 2003 3,589,465 444,672 3,113,225 66,987 4,062,078 11,276,427Currency translation differences,

representing net gainnot recognised in theincome statement — — — 12,949 — 12,949

Net profit for the year — — — — 2,092,071 2,092,071Transfer to statutory reserve — — 523,100 — (523,100) —Bonus issues 1,111 — — — (1,111) —Issue of ordinary shares

pursuant to ESOS 9,596 55,894 — — — 65,490Dividends (Note 36) — — — — (1,347,904) (1,347,904)

At 30 June 2004 3,600,172 500,566 3,636,325 79,936 4,282,034 12,099,033


MENU

163

CashFlow Statements for the year ended 30 June 2004

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

CASH FLOWS FROM OPERATING ACTIVITIESProfit before taxation 3,358,597 2,619,674 2,883,375 2,737,899Adjustments for:

Exchange fluctuation (91,493) (85,423) (84,721) (84,691)Share of results of associates (3,353) 95 — —Depreciation 180,645 178,865 138,617 127,208Impairment loss 237 346 — —Net gain on disposal of property,

plant and equipment (7,509) (12,785) (7,593) (11,439)Gain on disposal of foreclosed properties 1,051 (1,203) (73) —Amortisation of premiums less accretion of

discounts of investment securities 67,746 44,756 93,494 57,629(Writeback of provision)/provision for

diminution in value of investment securities (20,961) (17,959) (16,146) 661Provision for diminution in value

of investment in subsidiaries — — — 184,660Loan and financing loss and provision 855,644 1,127,264 677,174 888,954Provision for doubtful debts for other assets 6,474 21,083 1,655 7,921Interest/income-in-suspense 452,433 563,568 364,115 426,404Dividend income (21,744) (41,027) (603,824) (1,255,223)Property, plant and equipment written off 849 1,131 145 219Provision for commitments and contingencies 691 — — —Profit Equalisation Reserve 101,559 65,549 91,939 42,372Transfer of life, general takaful and

family takaful fund surplus (5,000) (25,000) — —

Operating profit before working capital changes 4,875,866 4,438,934 3,538,157 3,122,574Increase in securities purchased under

resale agreements (148,623) (67,483) (140,889) (64,378)(Increase)/decrease in deposits and placements

with banks and other financial institutions (1,034,511) (1,460,946) 1,126,451 (1,692,127)Decrease/(increase) in dealing securities 477,079 846,546 (66,809) (58,601)Increase in loans, advances and financing (7,890,098) (8,726,144) (7,599,347) (6,468,465)(Increase)/decrease in other assets (35,361) 36,302 (89,151) (5,019)


MENU

CashFlow Statements for the year ended 30 June 2004


Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

CASH FLOWS FROM OPERATING ACTIVITIES (CONT’D.)

(Increase)/decrease in statutory depositswith Central Banks (322,561) 235,149 (234,235) 255,219

Increase in deposits from customers 13,831,213 6,820,897 10,031,576 4,698,221Increase/(decrease) in deposits and placements

of banks and other financial institutions 825,674 (402,156) 1,381,582 1,949,864Increase in obligations on securities

sold under repurchase agreements 1,601,459 1,267,636 1,270,109 1,075,310Increase in bills and acceptances payable 168,439 1,156,722 1,653,491 1,447,051Net purchase of investment securities (3,618,952) (1,472,349) (4,041,666) (1,743,629)(Decrease)/increase in other liabilities (26,235) 84,315 84,753 116,548Increase in life, general takaful and

family takaful fund assets (856,681) (405,936) — —Increase in life, general takaful and family takaful

fund liabilities and policy holders’ funds 861,681 430,936 — —

Cash generated from operations 8,708,389 2,782,423 6,914,022 2,632,568Taxes and zakat paid (887,611) (894,402) (628,432) (606,731)

Net cash generated from operating activities 7,820,778 1,888,021 6,285,590 2,025,837

CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property, plant and equipment (159,304) (259,537) (144,175) (208,214)Acquisition of insurance business,

net of cash acquired — (40,043) — —Purchase of shares in subsidiaries — (11,675) — (97,040)Dividends received from associates 972 1,098 972 972Acquisition of shares of associates — (1,000) — (600)Proceeds from disposal of property,

plant and equipment 22,233 40,361 14,851 32,515Dividends received 15,656 41,027 453,528 907,582

Net cash (used in)/generatedfrom investing activities (120,443) (229,769) 325,176 635,215

MENU


Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

CASH FLOWS FROM FINANCING ACTIVITIESProceeds from issuance of shares 65,490 176,753 65,490 176,753Loans sold to Cagamas (129,919) 267,556 421,965 19,004Dividends paid (1,347,904) (1,330,289) (1,347,904) (1,330,289)Dividends paid to minority interest (6,181) (2,846) — —

Net cash used in financing activities (1,418,514) (888,826) (860,449) (1,134,532)

NET INCREASE IN CASH AND CASHEQUIVALENTS 6,281,821 769,426 5,750,317 1,526,520

CASH AND CASH EQUIVALENTSAT BEGINNING OF YEAR 16,727,259 15,870,203 13,777,510 12,164,086

CASH AND CASH EQUIVALENTS AT ENDOF YEAR 23,009,080 16,639,629 19,527,827 13,690,606

Cash and cash equivalents comprise:

Cash and short term funds as previouslyreported 23,009,080 16,639,629 19,527,827 13,690,606

Effects of exchange rate changes — 87,630 — 86,904

As restated 23,009,080 16,727,259 19,527,827 13,777,510


MENU

Notesto the Financial Statements – 30 June 2004


1. CORPORATE INFORMATION

The Bank is principally engaged in the business of banking in all its aspects which also include Islamic Banking Schemeoperations.

The subsidiaries are principally engaged in the businesses of a finance company, merchant bank, general and lifeinsurance (including takaful insurance), stock broking, discount house, leasing and factoring, trustee and nomineeservices, unit trust management, asset management and venture capital.

There were no significant changes in these activities during the financial year, except for certain subsidiaries asdisclosed in Note 12.

The Bank is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the MainBoard of Bursa Malaysia Securities Berhad. The registered office of the Bank is located at 14th Floor, MenaraMaybank, 100, Jalan Tun Perak, 50050 Kuala Lumpur.

The number of employees in the Group and in the Bank at the end of the financial year were 20,821 (2003: 21,042)and 15,321 (2003: 14,904) respectively.

These financial statements were authorised for issue by the Board of Directors in accordance with a resolution of thedirectors on 30 August 2004.

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

The financial statements of the Group and of the Bank have been prepared in accordance with the provisions ofthe Companies Act, 1965, Bank Negara Malaysia Guidelines and applicable approved accounting standards inMalaysia. The financial statements incorporate those activities relating to Islamic Banking Scheme (“IBS”) which havebeen undertaken by the Group and the Bank.

IBS refers generally to the acceptance of deposits and granting of financing under the principles of Shariah.

During the financial year ended 30 June 2004, the Group and the Bank have adopted the following accountingstandards issued by the Malaysian Accounting Standards Board (“MASB”):

MASB Standard 29 Employee BenefitsMASB i-1 Presentation of Financial Statements of Islamic Financial Institutions

The adoption of the above standards have not given rise to any adjustments to the opening balances of retainedprofits of the prior and current years. However, the adoption of MASB i-1 has resulted in certain comparatives tobe disclosed to conform with the current year's presentation of the IBS operations.

MENU


3. SIGNIFICANT ACCOUNTING POLICIES

(i) Basis of AccountingThe financial statements of the Group and of the Bank have been prepared under the historical cost conventionunless otherwise indicated in the accounting policies below.

(ii) Basis of Consolidation(a) Subsidiaries

The consolidated financial statements include the financial statements of the Bank and all its subsidiaries.Subsidiaries are those companies in which the Group has power to exercise control over the financial andoperating policies so as to obtain benefits from their activities.

Subsidiaries are consolidated using the acquisition method of accounting. Under the acquisition methodof accounting, the results of subsidiaries acquired or disposed of during the year are included in theconsolidated income statement from the effective date of acquisition or up to the effective date ofdisposal, as appropriate. The assets and liabilities of a subsidiary are measured at their fair values at thedate of acquisition and these values are reflected in the consolidated balance sheet. The differencebetween the cost of acquisition and the fair value of the Group’s share of the net assets of the acquiredsubsidiary at the date of acquisition (goodwill/reserve on consolidation/acquisition) is accounted for inaccordance with Note 3(iii) below.

Intragroup transactions, balances and resulting unrealised gains are eliminated on consolidation and theconsolidated financial statements reflect external transactions only. Unrealised losses are eliminated onconsolidation unless costs cannot be recovered.

The gain or loss on disposal of a subsidiary is the difference between the net disposal proceeds and theGroup’s share of its net assets together with exchange differences which were not previously recognisedin the consolidated income statement.

Minority interest in the consolidated balance sheet consist of the minorities' share of the fair value of theidentifiable assets and liabilities of the acquiree as at acquisition date and the minorities' share ofmovements in the acquiree's equity since then.

MENU



3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D.)

(ii) Basis of Consolidation (Cont’d.)(b) Associates

Associates are those entities in which the Group exercises significant influence but not control, throughparticipation in the financial and operating policy decisions of the entities.

Investments in associates are accounted for in the consolidated financial statements using the equitymethod of accounting based on the audited or management financial statements of the associatedcompanies. Under the equity method of accounting, the Group's share of profits less losses of associatesduring the year is included in the consolidated income statement. The Group's interest in associatedcompanies is carried in the consolidated balance sheet at cost plus the Group's share of post-acquisitionretained profits or accumulated losses and other reserves.

Unrealised gains on transactions between the Group and the associates are eliminated to the extent ofthe Group's interest in the associates. Unrealised losses are eliminated using the same basis unless the costcannot be recovered.

(iii) Goodwill/Reserve Arising on Consolidation/AcquisitionGoodwill or reserve arising on consolidation/acquisition represents the differences between the cost ofacquisition and the Group's interest in the fair value of the identifiable assets and liabilities of the subsidiaryand associates at the date of acquisition. Goodwill or reserve arising on consolidation/acquisition is writtenoff/credited in full to retained profits immediately.

(iv) Investment in Subsidiaries and AssociatesThe Bank’s investments in subsidiaries and associates are stated at cost less impairment losses. The policy forthe recognition and measurement of impairment losses is in accordance with Note 3(xxxi) below.

On disposal of such investments, the difference between the net disposal proceeds and their carrying amountsis charged or credited to the income statement.

(v) Dealing SecuritiesDealing securities are marketable securities that are acquired and held with the intention of resale in the shortterm and are stated at the lower of cost and market value on portfolio basis. Increases or decreases in thecarrying amount of dealing securities are credited or charged to the income statement. On disposal of thedealing securities, the differences between the net disposal proceeds and their carrying amounts are chargedor credited to the income statement.

Transfers, if any, between dealing and investment securities are made at the lower of cost and market value.

MENU



(vi) Investment SecuritiesInvestment securities are securities that are acquired and held for yield or capital growth and are usually heldto maturity.

Malaysian Government Securities, Malaysian Government Investment issues, Malaysian Government floating ratenotes, Cagamas Bonds and other Government securities are stated at cost adjusted for amortisation ofpremiums or accretion of discounts, where applicable, to maturity dates.

Quoted investments are stated at the lower of cost and market value on portfolio basis.

Unquoted investments are stated at cost and where applicable, adjusted for amortisation of premiums oraccretion of discounts to maturity dates. Provision is made for diminution in value which is other thantemporary.

On disposal of the investment securities, the differences between the net disposal proceeds and their carryingamounts are charged or credited to the income statement.

(vii) Provision for Doubtful DebtsSpecific provisions are made for doubtful debts which have been individually reviewed and specifically identifiedas bad and doubtful.

In addition, a general provision based on a certain percentage of total risk-weighted assets, which takes intoaccount all balance sheet items and their perceived risk levels, is maintained.

(viii) Property, Plant and Equipment and DepreciationProperty, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Thepolicy for the recognition and measurement of impairment losses is in accordance with Note 3(xxxi).

Freehold land and buildings-in-progress are not depreciated. Leasehold land is depreciated over the period ofthe respective leases which ranges from 30 to 999 years. The remaining period of respective leases ranges from12 to 911 years.

MENU




(viii) Property, Plant and Equipment and Depreciation (Cont’d.)Depreciation of other property, plant and equipment is provided for on a straight-line basis to write-off the costof each asset over its estimated useful life at the following annual rates:

Buildings on freehold land Over 50 yearsBuildings on leasehold land 50 years or remaining life of the lease, whichever is

shorterOffice furniture, fittings, equipment and renovations 10% – 25%Computers and peripherals 14% – 25%Electrical and security equipment 8% – 25%Motor vehicles 20% – 25%

Upon the disposal of an item of property, plant or equipment, the difference between the net disposal proceedsand the carrying amount is charged or credited to the income statement.

(ix) Investment PropertiesInvestment properties consist of investments in land and buildings that are not substantially occupied for useby, or in the operations of the Group. In line with MASB Standard 18: Life Insurance Business, land andbuildings owned by the life insurance business are classified as investment properties, notwithstanding that theyare substantially occupied for use by, or in the operations of the Group.

Investment properties are treated as long term investments and are stated at cost and include related andincidental expenditure incurred. Investment properties are not depreciated. The carrying amount of investmentproperties is reduced to recognise impairment losses, if any. The policy for the recognition and measurementof impairment losses is in accordance with Note 3(xxxi).

(x) Other AssetsOther receivables are carried at anticipated realisable values. Bad debts are written off when identified. Anestimate is made for doubtful debts based on a review of all outstanding amounts as at the balance sheet date.

(xi) Repurchase AgreementsSecurities purchased under resale agreements are securities which the Group had purchased with a commitmentto resell at future dates. The commitments to resell the securities are reflected as an asset on the balance sheet.

Conversely, obligations on securities sold under repurchase agreements are securities which the Group had soldfrom its portfolio, with a commitment to repurchase at future dates. Such financing transactions andcorresponding obligations to purchase the securities are reflected as a liability on the balance sheet.

(xii) Bills and Acceptances PayableBills and acceptances payable represent the Group’s own bills and acceptances rediscounted and outstanding inthe market.

MENU



(xiii) Provisions for LiabilitiesProvisions for liabilities are recognised when the Group has a present obligation as a result of a past eventand it is probable that an outflow of resources embodying economic benefits will be required to settle theobligation, and a reliable estimate of the amount can be made.

Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Wherethe effect of the time value of money is material, the amount of the provision is the present value of theexpenditure expected to be required to settle the obligation.

(xiv) LiabilitiesDeposits from customers, deposits and placements of banks and financial institutions are stated at placementvalues. Other liabilities are stated at cost which is the fair value of the consideration to be paid in the futurefor goods and services received.

(xv) Profit Equalisation Reserves (“PER”) on IBS OperationsPER is the amount provided in order to maintain a certain level of return for deposits in conformity with BankNegara Malaysia’s “The Framework of the Rate of Return”. The PER is deducted at a rate which does notexceed the maximum amount of 15% of the total gross income of each financial year and is maintained upto the maximum of 30% of total Islamic banking capital fund.

(xvi) Income TaxIncome tax on the profit or loss for the year comprises current and deferred taxes. Current tax is the expectedamount of income taxes payable in respect of the taxable profit for the year and is measured using the taxrates that have been enacted at the balance sheet date.

Deferred tax is provided for, using the liability method, on temporary differences at the balance sheet datebetween the tax bases of assets and liabilities and their carrying amounts in the financial statements. Inprinciple, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assetsare recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extentthat it is probable that taxable profits will be available against which the deductible temporary differences,unused tax losses and unused tax credits can be utilised.

Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or fromthe initial recognition of an asset or liability in a transaction which is not a business combination and at thetime of the transaction, affects neither accounting profit nor taxable profit.

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realisedor the liability is settled, based on tax rates that have been enacted or substantively enacted at the balancesheet date. Deferred tax is recognised in the income statement, except when it arises from a transaction whichis recognised directly in equity, in which case the deferred tax is also charged or credited directly in equity,or when it arises from a business combination that is an acquisition, in which case the deferred tax is includedin the resulting goodwill or negative goodwill.

MENU




(xvii) Leases(a) Finance Lease/Lease Receivable

Assets leased to customers under agreements which transfer substantially all risks and rewards associatedwith ownership other than legal title are classified as lease receivables. The balance sheet amountrepresents total minimum lease payments receivable less unearned income and prepaid rentals. Initialdirect costs are immediately recognised as expenses.

(b) Operating LeasePayments made under operating leases are recognised in the income statement on an accrual basis inaccordance with the terms of the leases.

(xviii) Insurance and Family Takaful FundThe life assurance and family takaful fund is based on the actuarial valuation of the fund made up to 30 June 2004.

(xix) Commission and Management Expenses for Takaful BusinessCommission, which are costs directly incurred in securing contributions on takaful policies, are charged to therevenue account in the period in which they are incurred.

Commission and management expenses are borne by the family takaful and general takaful funds. However,the total expenses to be borne by the respective funds are capped at 20% of the gross contribution. Amountin excess of the 20% will be borne by the shareholder's fund, and is known as Wakalah deficit.

(xx) Unearned Premium Reserves and Unearned Contribution ReservesUnearned Premium Reserves (“UPR”) and Unearned Contribution Reserve (“UCR”) represent the portion of thenet premiums and contribution of insurance policies and takaful certificates written that relate to the unexpiredperiods of policies and certificates at the end of the financial year. In determining the UPR and UCR at thebalance sheet date, the method that most accurately reflect the actual unearned premium is used as follows:

— 25% method for marine cargo and aviation cargo, and transit business.

MENU



(xx) Unearned Premium Reserves and Unearned Contribution Reserves (Cont’d.)— 1/24th method for other classes of Malaysian general policies and 1/365th method for all classes of general

takaful within Malaysia, reduced by the corresponding percentage of accounted gross direct businesscommissions and agency-related expenses not exceeding limits specified by Bank Negara Malaysia on:

Motor 10%Fire, engineering, aviation and marine hull 15%Medical health– Standalone individuals 15%– Group of 3 or more 10%Workmen compensation and employers’ liability– Foreign workers 10%– Others 25%Other classes 20%

— 1/8th method for all classes of overseas inward treaty business with a deduction of 20% for acquisition costs.

— Bond policies and non-annual certificates are time apportioned over the periods of the risks.

(xxi) Provision for Outstanding ClaimsFor general insurance business and general takaful businesses, a liability for outstanding claims is recognisedin respect of both direct insurance and inward reinsurance. The amount of outstanding claims is the bestestimate of the expenditure required together with related expenses less recoveries to settle the presentobligation at the balance sheet date. Provision is also made for the cost of claims together with relatedexpenses incurred but not reported at balance sheet date based on an actuarial valuation by a qualifiedactuary, using a mathematical method of estimation using actual claims development pattern.

For life assurance and family takaful businesses, claims and settlement costs that are incurred during thefinancial period are recognised when a claimable event occurs and/or the insurer is notified.

Claims and provisions for claims arising on life insurance and family takaful policies, including settlement costs,are accounted for using the case basis method and for this purpose, the benefits payable under a lifeinsurance policy are recognised as follows:

(i) maturity or other policy benefit payments due on specified dates are treated as claims payable on the due dates;

(ii) death, surrender and other benefits without due dates are treated as claims payable, on the date ofreceipt of intimation of death of the assured or occurrence of the contingency covered.

MENU




(xxii) BorrowingsBorrowings are reported at their face values. The costs of issuing capital instruments such as bonds anddebentures are charged to the income statement as and when incurred. Interest on borrowings is charged tothe income statement as expense as and when incurred.

(xxiii) Interest and Financing Income RecognitionInterest income is recognised on an accrual basis. Interest income includes the amortisation of premiums or accretionof discounts. Interest income on dealing and investment securities are recognised on an effective yield basis.

Interest income on overdrafts, term loans and housing loans is accounted for on a straight line basis byreference to the rest periods as stipulated in the loan agreements. Interest income from hire purchase,instalment sale financing, block discounting and leasing transactions is accounted for on the “sum-of-the-digits” method, whereby the income recognised for each month is obtained by multiplying the total incomeby a fraction whose numerator is the digit representing the remaining number of months and whosedenominator is the sum of the digits representing the total number of months.

Where an account has turned non-performing, interest is suspended with retroactive adjustment made to thedate of first default. Thereafter, interest on these accounts are recognised on a cash basis until such time asthe accounts are no longer classified as non-performing. Customers’ accounts are deemed to be non-performing where repayments are in arrears for more than three months and one month after maturity datefor trade bills, bankers’ acceptances and trust receipts. Credit card holders are deemed non-performing whererepayments are in arrears for more than three months from first day of default.

Income from the IBS business is recognised on the accrual basis in compliance with Bank Negara Malaysia’sguidelines.

(xxiv) Fee and Other Income RecognitionLoan arrangement, management and participation fees, factoring commissions, underwriting commissions andbrokerage fees are recognised as income based on contractual arrangements. Guarantee fee is recognised asincome upon issuance of the guarantee. Fees from advisory and corporate finance activities are recognisednet of service taxes and discounts on completion of each stage of the assignment.

Dividend income is recognised when the shareholder’s right to receive payment is established.

Premiums and contributions from general insurance and general takaful businesses, respectively are recognisedas income in a financial period in respect of risks assumed during that particular financial period. Inward treatyreinsurance premiums are recognised on the basis of periodic advices received from ceding insurers.

MENU



(xxiv) Fee and Other Income Recognition (Cont’d.)Premiums and contributions for life assurance and family takaful businesses, respectively, are recognised asincome on assumption of risks and subsequent premiums are recognised on due dates. Premiums outstandingat balance sheet date are recognised as income for the period provided they are still within the grace periodallowed for payment. Contribution income on long term policies is recognised as earned based on the time-apportionment method.

Gross contribution for takaful business are accounted for on accrual basis in accordance with the Principlesof Shariah as advised by Mayban Takaful Berhad’s Shariah Supervisory Council. Unrealised income is deferredand receipts in advance are treated as liabilities in the balance sheet.

Rollover fees on margin accounts and management fees from management of unit trust are recognised onan accrual basis.

(xxv) Interest, Financing and Related Expense RecognitionInterest expense and attributable profit (on activities relating to IBS business) on deposits and borrowings ofthe Group and Bank are expensed as incurred.

Handling fees paid to motor vehicle dealers on hire purchase loans are charged to income statement in theperiod when they are incurred in accordance with Bank Negara Malaysia Circular dated 4 July 2003.

(xxvi) Employee Benefits(a) Short term benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the year inwhich the associated services are rendered by employees of the Group. Short term accumulatingcompensated absences such as paid annual leave are recognised when services are rendered byemployees that increase their entitlement to future compensated absences. Short term non-accumulatingcompensated absences such as sick leave are recognised when the absences occur.

(b) Defined Contribution PlansAs required by law, companies in Malaysia make contributions to the Employees Provident Fund (“EPF”).Certain foreign branches of the Bank and subsidiaries make contributions to their respective countries’statutory pension schemes. Such contributions are recognised as an expense in the income statement asincurred.

MENU




(xxvii) Foreign Currencies(a) Foreign Currency Transactions

Transactions in foreign currencies are initially recorded in Ringgit Malaysia at rates of exchange ruling atthe transaction dates. Monetary assets and liabilities in foreign currencies at the balance sheet date aretranslated into Ringgit Malaysia at rates of exchange ruling at that date, unless hedged by forwardforeign exchange contracts, in which case the rates specified in such forward contracts are used. Non-monetary items which are denominated in foreign currencies and carried at historical cost are translatedusing the historical rate as of the date of acquisition and non-monetary items which are denominatedin foreign currencies and carried at fair value are translated using the exchange rate that existed whenthe values were determined.

All exchange differences are taken to the income statement.

(b) Foreign Operations and EntitiesFinancial statements of foreign consolidated subsidiaries and amalgamated branches are translated atyear-end exchange rates with respect to the balance sheet, and at exchange rates at the dates of thetransactions with respect to the income statement. All resulting translation differences are recognised in equity.

The principal exchange rates for every unit of foreign currency ruling at balance sheet date used are asfollows:

2004 2003RM RM

Singapore Dollars (SGD) 2.2096 2.1581Hong Kong Dollars (HKD) 0.4872 0.4873United States Dollars (USD) 3.8000 3.8000Philippines Peso (Peso) 0.0677 0.0711Indonesia Rupiah (IDR) 0.0004 0.0005Papua New Guinea Kina (Kina) 1.1989 1.0868Brunei Dollars (BND) 2.2096 2.1581Great Britain Pound (GBP) 6.8624 6.2772

MENU



(xxviii) Foreign Exchange ContractsForeign exchange trading positions, including spot and forward contracts, are revalued at prevailing marketrates at balance sheet date and the resultant gains and losses are recognised in the income statement.

(xxix) Interest Rate Swaps and Futures ContractsThe Group and the Bank use interest rate swaps and futures contracts mainly in their overall interest raterisk management.

Interest income or interest expense associated with interest rate swaps that qualify as hedges is recognisedover the life of the swap agreement as a component of interest income or interest expense.

Gains and losses on interest rate swaps and futures contracts that do not qualify as hedges are recognisedin the current year using mark-to-market method and are included in the income statement.

(xxx) Cash and Cash EquivalentsFor the purpose of the cash flow statements, cash and cash equivalents include cash and bank balances andshort-term funds with remaining maturity of less than one month.

(xxxi) Impairment of AssetsAt each balance sheet date, the Group and the Bank review the carrying amounts of the assets, other thanfinancial instruments to determine whether there is any indication of impairment. If any such indication exists,impairment is measured by comparing the carrying values of the assets with their recoverable amounts.Recoverable amount is the higher of net selling price and value in use, which is measured by reference todiscounted future cash flows.

An impairment loss is recognised as an expense in the income statement immediately. Reversal of impairmentlosses recognised in prior years is recorded when there is an indication that the impairment losses recognisedfor the asset no longer exist or have decreased.

(xxxii) Financial InstrumentsFinancial instruments are recognised in the balance sheet when the Group has become a party to thecontractual provisions of the instrument. The accounting policies on recognition and measurement of theseitems are disclosed in their respective accounting policies.

Financial instruments are classified as liabilities or equity in accordance with the substance of the contractualarrangement. Interest, dividends and gains and losses relating to a financial instrument classified as a liability,are reported as expense or income. Distributions to holders of financial instruments classified as equity arecharged directly to equity. Financial instruments are offset when the Group has a legally enforceable right tooffset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.

MENU



4. CASH AND SHORT-TERM FUNDS

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Cash, balances and deposits with banks andother financial institutions 23,005,745 16,541,227 19,527,827 13,686,225

Money at call 3,335 98,402 — 4,381

23,009,080 16,639,629 19,527,827 13,690,606

Included in cash and short-term funds of the Group are monies held in trust of RM65,114,594 (2003:RM33,318,055) in respect of the stockbroking business.

5. DEPOSITS AND PLACEMENTS WITH BANKS AND OTHER FINANCIAL INSTITUTIONS

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Licensed banks 2,395,218 3,052,725 3,233,049 4,654,338Licensed finance companies 20,041 215,993 — 40,000Licensed merchant banks 145,648 64,900 123,600 184,500Bank Negara Malaysia 3,825,766 1,877,168 2,506,166 1,795,168Other financial institutions 300,117 441,493 266,673 581,933

6,686,790 5,652,279 6,129,488 7,255,939

Included in deposits with other financial institutions is an amount of USD10,000,000 (2003: USD10,000,000) orRinggit Malaysia equivalent of RM38,000,000 (2003: RM38,000,000) pledged with the New York State BankingDepartment in satisfaction of capital equivalency deposit requirements.

MENU


6. SECURITIES PURCHASED UNDER RESALE AGREEMENTS

The underlying securities purchased under resale agreements are as follows:

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Malaysian Government Securities 665,527 — 665,527 —Foreign government bonds — 385,963 — 385,963Foreign government treasury bills 57,365 196,040 57,365 196,040Negotiable instruments of deposits 10,739 3,005 — —

733,631 585,008 722,892 582,003

7. DEALING SECURITIES

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Money market instruments:

Malaysian Government Securities 43,835 75,259 — —Cagamas bonds — 24,989 — 24,989Malaysian Government treasury bills 43,364 — 43,364 —Bank Negara Malaysia bills and notes 69,982 — 69,982 —Bankers’ acceptances and Islamic accepted bills 25,693 159,873 — —Danamodal bonds — 9,891 — —Danaharta bonds — 14,418 — —Khazanah bonds — 169,338 — —Foreign government treasury bills 456 69,678 456 —Foreign certificates of deposit 66,221 70,904 — —

249,551 594,350 113,802 24,989

Quoted securities:

Shares, trust units and loan stocksquoted in Malaysia 1 8 — —

MENU



7. DEALING SECURITIES (CONT’D.)

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Unquoted securities:

Private and Islamic debt securities in Malaysia 50,005 110,269 50,005 —Foreign public authority and

private debt securities — 72,009 — 72,009

50,005 182,278 50,005 72,009

299,557 776,636 163,807 96,998

Market value of quoted securities:

Shares, trust units and loan stocksquoted in Malaysia 1 8 — —

Indicative value of unquoted securities:

Malaysian Government Securities 43,835 75,444 — —Cagamas bonds — 24,993 — 24,993Malaysian Government treasury bills 43,377 — 43,377 —Bank Negara Malaysia bills and notes 69,977 — 69,977 —Danamodal bonds — 9,915 — —Danaharta bonds — 14,441 — —Khazanah bonds — 170,720 — —Foreign government treasury bills 456 69,678 456 —Foreign certificates of deposit 66,221 70,904 — —Private and Islamic debt securities in Malaysia 50,067 112,925 50,067 —Foreign public authority and

private debt securities — 72,009 — 72,009

Bankers’ acceptances, Islamic accepted bills and negotiable instruments of deposits' carrying values approximate themarket value due to their relatively short maturities.

MENU


8. INVESTMENT SECURITIES

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000


Malaysian Government Securities 4,554,773 3,267,135 3,938,439 2,529,118Cagamas bonds 2,067,263 2,284,334 1,353,007 1,194,934Foreign government securities 1,305,974 1,386,868 1,153,814 1,268,800Malaysian Government treasury bills 398,782 210,611 398,782 210,611Malaysian Government

Investment certificates and issues 430,352 254,896 329,240 203,672Cagamas notes — 133,256 — 133,256Bank Negara Malaysia bills and notes — 1,298,817 — 1,258,817Foreign government treasury bills 889,751 161,521 787,747 101,204Negotiable instruments of deposits 1,724,783 2,453,415 1,969,979 2,608,154Bankers’ acceptances and Islamic accepted bills 5,471,975 2,832,969 4,806,806 2,321,192Khazanah bonds 405,847 327,610 161,834 218,224Danaharta bonds 190,120 439,150 46,933 62,067Danamodal bonds — 99,154 — 716

17,439,620 15,149,736 14,946,581 12,110,765

Quoted securities:

In Malaysia:Shares, warrants, trust units and loan stocks 783,307 657,162 537,535 477,358

783,307 657,162 537,535 477,358Outside Malaysia:Shares, warrants, trust units and loan stocks 77,938 132,498 53,876 107,592

861,245 789,660 591,411 584,950

MENU



8. INVESTMENT SECURITIES (CONT’D.)

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Unquoted securities:

Shares, trust units and loan stocksin Malaysia (Note 8(v)) 1,448,717 1,111,500 897,319 643,199

Private and Islamic debt securities in Malaysia 6,590,636 6,223,290 3,877,439 3,525,645Malaysian Government bonds 453,146 612,368 453,146 612,368Foreign government bonds 37,895 38,020 37,895 38,020Foreign private debt securities 3,062,639 2,058,201 2,843,892 1,850,619Credit linked note (Note 8(vi)) 190,000 190,000 190,000 190,000Others 1,562 1,562 1,562 1,562

11,784,595 10,234,941 8,301,253 6,861,413

Total investments securities at cost 30,085,460 26,174,337 23,839,245 19,557,128

Net accretion of discounts/(amortisation of premiums) (34,474) 32,194 (74,791) (17,127)

Provision for diminution in value of:

Shares, warrants, trust units andloan stocks quoted in Malaysia (376,441) (260,247) (280,624) (177,610)

Shares, warrants, trust units and loan stocksquoted outside Malaysia (49,124) (98,080) (48,473) (97,177)

Foreign government bonds and private debt securities (151,054) (124,596) (150,871) (124,596)

Unquoted shares, trust units and loan stocks (614,916) (437,001) (478,543) (297,666)Unquoted private and Islamic debt securities (156,031) (155,354) (105,803) (107,130)

(1,347,566) (1,075,278) (1,064,314) (804,179)

28,703,420 25,131,253 22,700,140 18,735,822

MENU



Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

(i) Market value of quoted securities:

Shares, warrants, trust units andloan stocks quoted in Malaysia 615,363 488,161 400,654 332,456

Shares, warrants, trust units andloan stocks quoted outside Malaysia 36,547 50,538 10,270 26,590

651,910 538,699 410,924 359,046

(ii) Indicative value of unquoted securities:

Shares, trust units and loan stocksin Malaysia 872,486 1,000,319 418,961 678,697

Malaysian Government Securities 4,422,559 3,182,681 3,815,265 2,475,216Cagamas bonds 2,056,662 2,276,049 1,346,930 1,197,816Foreign government securities 1,307,034 1,305,861 1,154,947 1,293,293Malaysian Government treasury bills 398,760 210,659 398,760 210,659Malaysian Government

Investment certificates and issues 437,029 261,986 335,034 208,493Cagamas notes — 133,207 — 133,207Bank Negara Malaysia bills and notes — 1,257,457 — 1,257,457Foreign government treasury bills 889,482 100,903 787,477 100,903Khazanah bonds 428,590 370,883 169,841 242,910Danaharta bonds 220,275 498,156 53,039 67,793Danamodal bonds — 105,522 — 729Malaysian Government bonds 519,485 759,094 519,485 759,094Foreign government bonds 39,617 44,182 39,617 44,182Foreign private debt securities 3,058,531 2,060,430 2,862,176 1,870,111Private and Islamic debt securities

in Malaysia 6,444,301 6,212,075 3,727,649 3,605,030Credit linked note 190,000 190,000 190,000 190,000

Bankers’ acceptances, Islamic accepted bills and negotiable instruments of deposits’ carrying values approximatethe market value due to their relatively short maturities.

MENU




Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

(iii) The maturity structure of money marketinstruments held for investmentsare as follows:

Maturing within one year 9,586,278 10,655,615 8,796,280 8,673,900One year to three years 3,143,376 1,365,819 2,383,655 837,233Three years to five years 4,078,784 2,602,012 3,311,268 2,140,504After five years 631,182 526,290 455,378 459,128

17,439,620 15,149,736 14,946,581 12,110,765

(iv) Included in the investment securities arethe following securities sold underrepurchase agreements:

Negotiable instruments of deposits 1,072,905 2,369,965 1,072,905 2,369,965Bankers’ acceptances and

Islamic accepted bills 1,818,634 238,098 1,308,417 —Private debt securities 1,010,680 629,171 871,553 569,275Cagamas bonds — 20,000 — —

3,902,219 3,257,234 3,252,875 2,939,240

(v) Included in unquoted shares, trust units and loan stocks in Malaysia are 4,545,455 (2003: Nil) ordinary sharesin Bursa Malaysia Berhad (formerly known as the Kuala Lumpur Stock Exchange Berhad), received by the Grouparising from the demutualisation of Bursa Malaysia Berhad which was completed on 5 January 2004. UnderSection 4(4) of the Demutualisation (Kuala Lumpur Stock Exchange) Act 2003, the shares cannot be disposedwithout the appropriate regulatory approvals until and unless such shares have been listed. In the absence ofmore detailed information, the directors consider that the underlying net tangible asset value of RM2.74 pershare as reflected in the latest audited financial statements of Bursa Malaysia Berhad as at 31 December 2003is a reasonable indicator of fair value.

MENU



(vi) The credit linked note has a face value of USD50,000,000 (2003: USD50,000,000) or Ringgit Malaysiaequivalent of RM190,000,000 (2003: RM190,000,000) with an embedded credit default swap. The note wouldbe redeemed at face value on maturity date provided there is no occurrence of a specified credit event affectingthe reference entity or its obligations. If there is an occurrence of a credit event, the underlying asset (thereference obligation of the reference entity), or a cash settlement amount to be determined with reference tothe market value of the underlying asset in accordance with the terms of the contract, would be delivered bythe issuer of the note.

(vii) Included in the provision for diminution in value for investment securities above for the year are specificprovision and interest/income-in-suspense transferred from loans, advances and financing as a result of loansconverted to investment securities as follows:

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Specific provision 147,056 277,788 129,844 224,577Interest/income-in-suspense 14,882 42,722 5,535 32,188

(viii) Included in foreign private debt securities of the Group and the Bank above is an amount of USD12,000,000(2003: USDNil) or Ringgit Malaysia equivalent of RM45,600,000 (2003: RMNil) pledged to a foreign bank, whichis the counter party for asset swap transactions with total underlying amount of USD50,000,000 or RinggitMalaysia equivalent of RM190,000,000. The asset swap transactions include interest rate swaps that qualify ashedges in accordance with the Group policy and have been accounted for as such in the financial statements.

MENU



9. LOANS, ADVANCES AND FINANCING

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Overdrafts 13,520,006 13,926,830 13,500,944 13,913,157Term loans

– Fixed rate 5,539,708 6,874,230 5,120,578 5,334,802– Floating rate 78,022,308 73,456,266 64,146,529 60,234,508

Credit card receivables 1,801,054 1,637,624 1,429,191 1,223,837Bills receivable 967,646 1,054,503 963,398 1,087,409Trust receipts 2,188,718 1,850,684 2,177,759 1,835,325Claims on customers under acceptance credits 9,528,189 7,996,983 9,502,374 7,967,262Hire purchase and block discounting receivables 17,014,339 15,459,562 4,459,482 3,211,464Floor stocking receivables 116,744 106,159 68,590 50,862Lease receivables 39,410 47,578 — —Factored receivables 37,256 22,453 37,077 22,274Staff loans 1,060,504 1,038,367 810,876 796,523Housing loans to

– Executive directors of the Bank 219 121 219 121– Executive directors of subsidiaries 1,993 2,588 1,519 2,143

Others 21,556 22,083 — —

129,859,650 123,496,031 102,218,536 95,679,687Unearned interest and income (11,652,467) (11,098,650) (8,725,941) (8,090,522)

Gross loans, advances and financing 118,207,183 112,397,381 93,492,595 87,589,165Provision for bad and doubtful debts

– Specific (3,624,130) (4,541,801) (2,688,326) (3,405,370)– General (3,621,007) (3,474,440) (2,689,417) (2,590,235)

Interest/income-in-suspense (1,891,555) (1,892,670) (1,396,440) (1,433,206)

Net loans, advances and financing 109,070,491 102,488,470 86,718,412 80,160,354

MENU


9. LOANS, ADVANCES AND FINANCING (CONT’D.)

(i) Loans, advances and financing analysed by their economic purposes are as follows:

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Domestic operations:

Agriculture 2,295,383 2,011,006 2,263,791 1,967,113Mining and quarrying 211,631 190,214 201,387 178,165Manufacturing 12,986,979 13,081,554 12,659,240 12,743,303Electricity, gas and water 1,770,947 1,481,811 1,751,147 1,466,271Construction 6,213,481 5,838,436 5,437,549 5,052,043Real estate 1,586,567 1,864,800 1,473,110 1,663,880Purchase of landed properties:

– Residential 21,922,395 19,462,847 17,581,817 15,114,230– Non-residential 6,136,783 5,604,856 4,940,639 4,255,361– Less Islamic loans sold to Cagamas (114,380) (127,268) (114,380) (127,268)

General commerce 6,696,875 6,274,396 6,150,848 5,669,913Transport, storage and communication 1,443,847 2,150,588 1,345,754 2,057,910Finance, insurance and business service 11,383,087 11,790,919 11,235,411 11,733,813Purchase of securities 6,438,100 6,517,893 4,443,384 4,458,600Purchase of transport vehicles 10,043,289 9,890,646 34,395 36,603

– Less Islamic loans sold to Cagamas (351,994) (425,341) — —Consumption credit 4,161,734 3,771,047 3,465,493 3,072,242Others 2,991,656 3,143,422 2,773,109 2,869,384

95,816,380 92,521,826 75,642,694 72,211,563Labuan Offshore 4,048,468 3,891,741 — —

Total domestic operations 99,864,848 96,413,567 75,642,694 72,211,563

MENU




(i) Loans, advances and financing analysed by their economic purposes are as follows (Cont’d.):

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Overseas operations:

Singapore 14,987,617 12,624,627 14,987,617 12,624,627United States of America 407,307 416,435 407,307 416,435United Kingdom 142,283 114,549 142,283 114,549Hong Kong 1,330,594 1,485,905 1,330,594 1,485,905Brunei 265,031 273,461 265,031 273,461Vietnam 262,077 234,410 262,077 234,410Cambodia 69,249 62,418 69,249 62,418China 385,743 165,797 385,743 165,797Papua New Guinea 29,535 29,174 — —Philippines 404,837 502,129 — —Indonesia 58,062 74,909 — —

18,342,335 15,983,814 17,849,901 15,377,602

118,207,183 112,397,381 93,492,595 87,589,165

(ii) The maturity structure of loans, advances and financing is as follows:

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Maturity within one year 48,436,728 45,571,121 44,305,659 41,725,706One year to three years 10,837,391 11,581,574 6,023,639 6,309,731Three years to five years 14,821,650 14,833,099 8,350,988 8,362,349After five years 44,111,414 40,411,587 34,812,309 31,191,379

118,207,183 112,397,381 93,492,595 87,589,165

MENU



(iii) Movements in the non-performing loans, advances and financing (including interest and income receivables) areas follows:

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Gross balance at beginning of year 13,037,159 13,531,560 9,799,074 10,164,558Classified during the year 6,962,093 6,813,140 5,481,905 5,230,950Recovered/regularised during the year (5,646,100) (5,907,386) (4,217,085) (4,427,425)Amount written off (1,907,297) (861,557) (1,526,796) (707,352)Converted to investment securities (220,440) (582,047) (135,379) (486,046)Exchange differences and expenses

debited to customers’ accounts 48,841 43,449 56,962 24,389

Gross balance at end of year 12,274,256 13,037,159 9,458,681 9,799,074Less:– Specific provision (3,624,130) (4,541,801) (2,688,326) (3,405,370)– Interest/income-in-suspense (1,891,555) (1,892,670) (1,396,440) (1,433,206)

Net balance 6,758,571 6,602,688 5,373,915 4,960,498

Gross loans, advances and financing 118,207,183 112,397,381 93,492,595 87,589,165Add: Islamic loans sold to Cagamas 466,374 552,609 114,380 127,268

118,673,557 112,949,990 93,606,975 87,716,433Less:– Specific provision (3,624,130) (4,541,801) (2,688,326) (3,405,370)– Interest/income-in-suspense (1,891,555) (1,892,670) (1,396,440) (1,433,206)

Net loans, advances and financing(including Islamic loans sold to Cagamas) 113,157,872 106,515,519 89,522,209 82,877,857

Ratio of net non-performing loans 5.97% 6.20% 6.00% 5.99%

MENU




(iv) Movements in the provision for bad and doubtful debts and interest/income-in-suspense are as follows:

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Specific provision

Balance at beginning of year 4,541,801 4,626,185 3,405,370 3,570,503Provision made during the year 2,265,460 2,732,478 1,069,534 1,461,355Amount written back in respect

of recoveries (1,586,062) (1,802,044) (491,056) (708,535)Amount written off (1,379,029) (573,207) (1,085,909) (512,830)Transfer to general provision (11,428) (2,384) (11,801) (3,360)Transfer to provision for diminution

in value of investments (147,056) (277,788) (129,844) (224,577)Transfer to provision for restructured/

rescheduled loans and financing (63,893) (176,216) (76,227) (176,216)Exchange differences 4,337 14,777 8,259 (970)

Balance at end of year 3,624,130 4,541,801 2,688,326 3,405,370

General provision

Balance at beginning of year 3,474,440 3,282,202 2,590,235 2,455,641Provision made during the year 179,835 192,220 84,768 130,586Amount written back (47,147) (2,464) — —Transfer from specific provision 11,428 2,384 11,801 3,360Exchange differences 2,451 98 2,613 648


As a percentage of total loans(including Islamic loans sold to Cagamas,less specific provision and interest/income-in-suspense) 3.20% 3.26% 3.00% 3.13%

As a percentage of total risk-weightedassets, excluding deferred tax assets 2.92% 2.96% 2.81% 2.87%

MENU



(iv) Movements in the provision for bad and doubtful debts and interest/income-in-suspense are as follows:

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Interest/income-in-suspense

Balance at beginning of year 1,892,670 1,729,794 1,433,206 1,266,496Provision made during the year 1,094,638 1,184,699 800,800 824,842Amount written back in respect of recoveries (607,847) (595,820) (410,380) (376,631)Amount written off (492,562) (341,904) (440,887) (194,522)Transfer to provision for diminution in value

of investments (14,882) (42,722) (5,535) (32,188)Transfer from/(to) interest/income-in-

suspense for restructured/rescheduledloans and financing 14,851 (54,662) 14,851 (54,662)

Exchange differences 4,687 13,285 4,385 (129)


(v) Included in loans, advances and financing of the Group and the Bank are bankers’ acceptances sold underrepurchase agreements amounting to RM3,085,811,500 (2003: RM2,129,338,154).

10. OTHER ASSETS

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Interest receivable 476,818 430,734 416,198 366,494Other debtors, deposits and prepayments 1,412,120 1,452,387 357,093 316,634Foreclosed properties 117,270 96,926 54,689 57,283Investment properties 70,219 68,544 — —

2,076,427 2,048,591 827,980 740,411

MENU



11. STATUTORY DEPOSITS WITH CENTRAL BANKS

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

With Bank Negara Malaysia 3,122,298 2,918,304 2,406,000 2,236,000With other Central Banks 521,901 403,334 449,634 385,399

3,644,199 3,321,638 2,855,634 2,621,399

The non-interest-bearing statutory deposits maintained with Bank Negara Malaysia are in compliance with Section37(1)(c) of the Central Bank of Malaysia Act, 1958 (Revised 1994), the amounts of which are determined as setpercentages of total eligible liabilities. The statutory deposits of the foreign branches and subsidiaries aredenominated in foreign currencies and maintained with the Central Banks of respective countries, in compliance withthe applicable legislations.

12. INVESTMENT IN SUBSIDIARIES

Bank

2004 2003RM’000 RM’000

Unquoted shares, at cost– In Malaysia 1,518,057 1,518,110– Outside Malaysia 693,974 693,405

2,212,031 2,211,515Less: Provision for diminution in value (342,802) (342,802)

1,869,229 1,868,713

MENU


12. INVESTMENT IN SUBSIDIARIES (CONT’D.)

Details of the subsidiaries are as follows:

Principal Country ofName of Company Activities Incorporation Issued and Paid-up Share Capital Effective Interest

2004 2003 2004 2003% %

Banking

PT Bank Maybank Indocorp8 Banking Indonesia 493,819,000,000 1 493,819,000,000 1 93.9 93.9

Maybank International (L) Ltd. Offshore banking Malaysia 10,000,000 2 10,000,000 2 100.0 100.0

Maybank (PNG) Limited9 Banking Papua New 5,000,000 3 5,000,000 3 100.0 100.0Guinea

Maybank Philippines, Banking Philippines 3,147,156,390 4 3,147,156,390 4 99.97 99.97Incorporated 8

Finance

Mayban Finance Berhad Finance Malaysia 551,250,000 551,250,000 100.0 100.0

MFSL Limited Under member’s Singapore 12,000,000 5 12,000,000 5 100.0 100.0voluntaryliquidation

Sifin Berhad Ceased Malaysia 100,000,000 100,000,000 100.0 100.0operations

Aseamlease Berhad Leasing Malaysia 20,000,000 20,000,000 100.0 100.0

Mayban Allied Credit & Financing Malaysia 10,000,000 10,000,000 100.0 100.0Leasing Sdn. Bhd.

Aseam Credit Sdn. Bhd. Hire purchase Malaysia 20,000,000 20,000,000 100.0 100.0

Mayban Factoring Berhad Factoring Malaysia 2,000,000 2,000,000 100.0 100.0

Insurance

Mayban Fortis Holdings Berhad Investment Malaysia 170,570,000 170,570,000 70.0 70.0holding

Mayban Life Assurance Bhd. Life insurance Malaysia 100,000,000 100,000,000 62.0 62.0

Mayban Life International Offshore life Malaysia 3,500,000 2 3,500,000 2 62.010 43.4(Labuan) Ltd insurance

Mayban General General Malaysia 178,171,233 178,171,233 64.8 64.8Assurance Berhad insurance

Mayban Takaful Berhad Takaful Malaysia 35,000,000 35,000,000 70.0 70.0insurance

MENU





2004 2003 2004 2003% %

Investment Banking

Aseambankers Malaysia Berhad Merchant Malaysia 50,116,000 50,116,000 75.0 75.0banking

Mayban Securities (Holdings) Investment Malaysia 162,000,000 162,000,000 100.0 100.0Sendirian Berhad holding

Mayban Securities Sendirian Stock Malaysia 124,000,000 124,000,000 100.0 100.0Berhad broking

Mayban Discount Berhad Discount house Malaysia 45,000,000 45,000,000 92.5 92.5

Mayban Futures Sdn. Bhd. Ceased Malaysia 10,000,000 10,000,000 100.0 100.0operations inthe financial year

Mayban Securities (HK) Limited 8 Stockbroking Hong Kong 30,000,000 6 30,000,000 6 100.0 100.0

Mayban Securities (Jersey) Investment United 2 7 2 7 100.0 100.0Limited9 holding Kingdom

PhileoAllied Securities Stockbroking Philippines 21,875,000 4 21,875,000 4 100.0 100.0(Philippines) Inc.8

Budaya Tegas Sdn. Bhd. Under member’s Malaysia 2 2 100.0 100.0voluntaryliquidation

Asset Management/Trustees/Custody

Mayban Property Trust Ceased Malaysia 5,000,000 5,000,000 100.0 100.0Management Berhad operations

Mayban Unit Trust Berhad Unit trust fund Malaysia 4,000,000 4,000,000 93.8 93.8(formerly known as Mayban management

Management Berhad)

Mayban International Trust Dormant Malaysia 150,000 150,000 100.0 100.0(Labuan) Berhad

MENU




2004 2003 2004 2003% %

Asset Management/Trustees/Custody (Cont’d.)

Mayban Offshore Corporate Dormant Malaysia 2 2 100.0 100.0Services (Labuan) Sdn. Bhd.

Mayban Trustees Berhad Trustee services Malaysia 500,000 500,000 100.0 100.0

Mayban Ventures Sdn. Bhd. Venture capital Malaysia 14,000,000 14,000,000 92.5 92.5

Mayban Venture Capital Venture capital Malaysia 2 2 100.0 100.0Company Sdn. Bhd.

RPB Venture Capital Venture capital Philippines 8,560,000 4 8,560,000 4 60.0 60.0Corporation8

Mayban-JAIC Capital Investment Malaysia 2,000,000 2,000,000 47.2 47.2Management Sdn. Bhd. advisory and

administrationservices

Mayban Investment Fund Malaysia 5,000,000 5,000,000 90.4 90.4Management Sdn. Bhd. management

Philmay Property, Inc.8 Property leasing Philippines 100,000,000 4 100,000,000 4 60.0 60.0and trading

Mayban (Nominees) Nominee Malaysia 31,000 31,000 100.0 100.0Sendirian Berhad services

Mayban Nominees Nominee Malaysia 10,000 10,000 100.0 100.0(Tempatan) Sdn. Bhd. services

Mayban Nominees (Asing) Nominee Malaysia 10,000 10,000 100.0 100.0Sdn. Bhd. services

Mayban Nominees (Singapore) Nominee Singapore 60,000 5 60,000 5 100.0 100.0Private Limited 8 services

Mayban Nominees Nominee Hong Kong 3 6 3 6 100.0 100.0(HongKong) Limited 8 services

Aseam Malaysia Nominees Nominee Malaysia 10,000 10,000 75.0 75.0(Tempatan) Sdn. Bhd. services

Aseam Malaysia Nominees Nominee Malaysia 10,000 10,000 75.0 75.0(Asing) Sdn. Bhd. services

MENU





2004 2003 2004 2003% %


Mayfin Nominees (Tempatan) Nominee Malaysia 10,000 10,000 100.0 100.0Sdn. Bhd. services

Mayban Securities Nominees Under member’s Malaysia 10,000 10,000 100.0 100.0Sdn. Bhd. voluntary

liquidation

Mayban Securities Nominees Nominee Malaysia 10,000 10,000 100.0 100.0(Tempatan) Sdn. Bhd. services

Mayban Securities Nominees Nominee Malaysia 10,000 10,000 100.0 100.0(Asing) Sdn. Bhd. services

AFMB Nominees (Tempatan) Nominee Malaysia 10,000 10,000 100.0 100.0Sdn. Bhd. services

Mayban Allied Berhad Investment Malaysia 753,908,63811 704,000,000 100.0 100.0holding

Anfin Berhad Dormant Malaysia 106,000,000 106,000,000 100.0 100.0

Mayban Allied Nominees Under member’s Malaysia 40,000 40,000 100.0 100.0(Tempatan) Sdn. Bhd. voluntary

liquidation

Mayban Allied Nominees (Asing) Under member’s Malaysia 10,000 10,000 100.0 100.0Sdn. Bhd. voluntary

liquidation

Mayban Allied Property Holdings Dormant Malaysia 2,000,000 2,000,000 100.0 100.0Sdn. Bhd.

PhileoAllied Trustee Berhad Under member’s Malaysia 150,000 150,000 100.0 100.0voluntaryliquidation

Maysec (Ipoh) Sdn. Bhd. Under member’s Malaysia 100,000,000 100,000,000 100.0 100.0voluntaryliquidation

Maysec Nominees (Asing) Under member’s Malaysia 2 2 100.0 100.0Sdn. Bhd. 9 voluntary

liquidation

MENU




2004 2003 2004 2003% %


Maysec Nominees (Tempatan) Under member’s Malaysia 2 2 100.0 100.0Sdn. Bhd.9 voluntary

liquidation

Mayban Pacific Nominees Under member’s Malaysia 2 2 100.0 100.0(Asing) Sdn. Bhd. voluntary

liquidation

Mayban Pacific Nominees Under member’s Malaysia 10,000 10,000 100.0 100.0(Tempatan) Sdn. Bhd. voluntary

liquidation

Mayban P.B. Holdings Sdn. Bhd. Property Malaysia 1,000,000 1,000,000 100.0 100.0investment

Mayban Property (PNG) Property Papua New 2 3 2 3 100.0 100.0Limited 9 investment Guinea

Kerlipan Bersinar Sdn. Bhd.9 Investment Malaysia 7,946,679 7,946,679 72.7 72.7holding

Inter-City MPC (M) Sdn. Bhd.9 Mail processing Malaysia 7,200,000 7,200,000 72.7 72.7services

Note:(1) Indonesia Rupiah (IDR)(2) United States Dollars (USD)(3) Papua New Guinea Kina (Kina)(4) Philippines Peso (Peso)(5) Singapore Dollars (SGD)(6) Hong Kong Dollars (HKD)(7) Great Britain Pound (GBP)(8) Audited by firms affiliated with Ernst & Young(9) Audited by firms of auditors other than Ernst & Young(10) Increase as a result of additional interest acquired by Mayban Life Assurance Berhad, a subsidiary of the Bank

(Note 46(b))(11) Increase as a result of capitalisation of pre-acquisition retained profits by way of bonus issue in the subsidiary

MENU



13. INVESTMENT IN ASSOCIATES

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Unquoted shares, at cost 12,720 12,720 9,740 9,740Exchange differences 1,861 1,892 — —Share of post-acquisition reserves 4,326 2,689 — —

18,907 17,301 9,740 9,740

Represented by the Group’s share of:

Net tangible assets 18,907 17,301

Details of the associates are as follows:

Country of PrincipalName of Company Effective Interest Incorporation Activities

2004 2003

Computer Recovery Centre Sdn. Bhd. 45% 45% Malaysia Computer disaster recovery services

UzbekLeasing International A. O. 35% 35% Uzbekistan Leasing

Philmay Holding, Inc. 33% 33% Philippines Investment holding

Baiduri Securities Sdn. Bhd. 39% 39% Brunei Under members’ voluntary liquidation

TX 123 Sdn. Bhd. 50% 50% Malaysia E-commerce business

Pelaburan Hartanah Nasional Berhad 30% 30% Malaysia Property trust

MENU


14. PROPERTY, PLANT AND EQUIPMENT

OfficeFurniture,

Fittings, ElectricalEquipment Computers and

and and Security Motor Buildings-inGroup *Properties Renovations Peripherals Equipment Vehicles Progress Total

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

CostBalance at 1 July 2003 1,211,432 662,973 953,733 149,291 18,603 38,947 3,034,979Additions 2,790 20,913 77,452 2,033 1,396 54,720 159,304Disposals (8,859) (6,812) (6,426) (332) (303) (9) (22,741)Write-offs — (28,353) (5,696) (3,677) (561) — (38,287)Transfers 7,818 48,958 23 2,029 — (61,284) (2,456)Exchange differences 996 972 2,236 124 (78) — 4,250

Balance at 30 June 2004 1,214,177 698,651 1,021,322 149,468 19,057 32,374 3,135,049

Accumulated Depreciationand Impairment Losses

Balance at 1 July 2003Accumulated depreciation 212,683 528,591 746,180 110,317 13,297 — 1,611,068Accumulated impairment

losses 3,938 — — — — — 3,938

216,621 528,591 746,180 110,317 13,297 — 1,615,006Charge for the year

(Note 29) 20,894 54,732 94,524 7,885 2,610 — 180,645Impairment loss (Note 29) 233 4 — — — — 237Disposals (1,375) (3,623) (3,964) (306) (915) — (10,183)Write-offs — (28,197) (5,590) (3,649) (2) — (37,438)Transfers — (31) — — — — (31)Exchange differences 1,079 801 1,979 80 52 — 3,991

Balance at 30 June 2004 237,452 552,277 833,129 114,327 15,042 — 1,752,227

MENU



14. PROPERTY, PLANT AND EQUIPMENT (CONT’D.)

OfficeFurniture,


and and Security Motor Buildings-inGroup (Cont’d.) *Properties Renovations Peripherals Equipment Vehicles Progress Total

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Analysed as:Accumulated depreciation 233,281 552,273 833,129 114,327 15,042 — 1,748,052Accumulated

impairment losses 4,171 4 — — — — 4,175

237,452 552,277 833,129 114,327 15,042 — 1,752,227

Net Book ValueAt 30 June 2004 976,725 146,374 188,193 35,141 4,015 32,374 1,382,822

At 30 June 2003 994,811 134,382 207,553 38,974 5,306 38,947 1,419,973

Details at 1 July 2002Cost 1,204,630 625,366 852,741 145,532 53,786 23,713 2,905,768Accumulated depreciation 195,351 498,039 688,248 103,500 44,039 — 1,529,177

Depreciation chargefor 2003 (Note 29) 22,028 56,837 88,610 8,269 3,121 — 178,865

Amount written off(Note 29)

At 30 June 2004 — 156 106 28 559 — 849

At 30 June 2003 — 737 33 361 — — 1,131

MENU



* Properties consist of:

Buildings on Leasehold Land Buildings on Leasehold LandFreehold Freehold Less Than 50 Years Less Than 50 Years

Group (Cont’d.) Land Land 50 Years or More 50 Years or More Total

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

CostBalance at 1 July 2003 101,189 430,390 10,101 103,858 113,830 452,064 1,211,432Additions 1,606 205 — 23 2 954 2,790Disposals (3,491) (3,508) (515) (196) (727) (422) (8,859)Transfers 4,462 2,556 — 1,983 (2,049) 866 7,818Exchange differences 172 529 466 — (1,261) 1,090 996

Balance at 30 June 2004 103,938 430,172 10,052 105,668 109,795 454,552 1,214,177

Accumulated Depreciationand Impairment Losses

Balance at 1 July 2003Accumulated depreciation — 116,715 3,102 11,297 21,625 59,944 212,683Accumulated impairment

losses — 3,864 — — — 74 3,938

— 120,579 3,102 11,297 21,625 60,018 216,621Charge for the year — 8,506 194 1,274 746 10,174 20,894Impairment loss — 140 — — 93 — 233Disposals — (1,034) (51) (25) (91) (174) (1,375)Exchange differences — 299 — 1,828 100 (1,148) 1,079

Balance at 30 June 2004 — 128,490 3,245 14,374 22,473 68,870 237,452

MENU






Group (Cont’d.) Land Land 50 Years or More 50 Years or More Total

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Analysed as:Accumulated depreciation — 124,486 3,245 14,374 22,380 68,796 233,281Accumulated

impairment losses — 4,004 — — 93 74 4,171

— 128,490 3,245 14,374 22,473 68,870 237,452

Net Book ValueAt 30 June 2004 103,938 301,682 6,807 91,294 87,322 385,682 976,725

At 30 June 2003 101,189 309,811 6,999 92,561 92,205 392,046 994,811

Details at 1 July 2002Cost 103,202 432,238 10,143 104,258 120,488 434,301 1,204,630Accumulated depreciation — 112,437 2,921 10,156 20,399 49,438 195,351

Depreciation chargefor 2003 — 8,566 200 1,171 1,775 10,316 22,028

MENU



OfficeFurniture,


and and Security Motor Buildings-inBank *Properties Renovations Peripherals Equipment Vehicles Progress Total

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

CostBalance at 1 July 2003 904,321 438,111 794,525 98,853 9,922 38,740 2,284,472Additions 979 17,825 68,657 1,635 845 54,234 144,175Disposals (2,932) (5,045) (5,939) (317) (559) — (14,792)Write-offs — (24,039) (2,315) (3,577) — — (29,931)Transfers 10,143 49,077 23 2,029 — (61,272) —Exchange differences 1,782 1,105 2,134 98 67 — 5,186

Balance at 30 June 2004 914,293 477,034 857,085 98,721 10,275 31,702 2,389,110

Accumulated DepreciationBalance at 1 July 2003 177,861 358,784 615,748 88,401 6,882 — 1,247,676Charge for the year

(Note 29) 16,386 36,415 80,834 3,535 1,447 — 138,617Disposals (720) (2,435) (3,476) (291) (612) — (7,534)Write-offs — (23,925) (2,291) (3,570) — — (29,786)Exchange differences 796 908 1,703 56 36 — 3,499

Balance at 30 June 2004 194,323 369,747 692,518 88,131 7,753 — 1,352,472

Net Book ValueAt 30 June 2004 719,970 107,287 164,567 10,590 2,522 31,702 1,036,638

At 30 June 2003 726,460 79,327 178,777 10,452 3,040 38,740 1,036,796

MENU




OfficeFurniture,


and and Security Motor Buildings-inBank *Properties Renovations Peripherals Equipment Vehicles Progress Total

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Details at 1 July 2002Cost 904,650 407,836 696,513 94,903 30,952 23,273 2,158,127Accumulated depreciation 161,454 341,385 566,579 85,203 26,709 — 1,181,330

Depreciation chargefor 2003 (Note 29) 16,506 32,599 73,216 3,712 1,175 — 127,208

Amount written off(Note 29)

At 30 June 2004 — 114 24 7 — — 145

At 30 June 2003 — 215 — 4 — — 219

MENU





Bank (Cont’d.) Land Land 50 Years or More 50 Years or More Total

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

CostBalance at 1 July 2003 67,406 356,467 7,699 73,145 57,209 342,395 904,321Additions — — — 23 2 954 979Disposals (1,044) (1,270) — (196) — (422) (2,932)Transfers 4,462 2,556 — 1,983 276 866 10,143Exchange differences 172 137 466 — (20) 1,027 1,782

Balance at 30 June 2004 70,996 357,890 8,165 74,955 57,467 344,820 914,293

Accumulated DepreciationBalance at 1 July 2003 — 102,932 2,537 9,458 12,942 49,992 177,861Charge for the year — 7,156 156 858 260 7,956 16,386Disposals — (521) — (25) — (174) (720)Exchange differences — 59 — 1,828 91 (1,182) 796

Balance at 30 June 2004 — 109,626 2,693 12,119 13,293 56,592 194,323

Net Book ValueAt 30 June 2004 70,996 248,264 5,472 62,836 44,174 288,228 719,970

At 30 June 2003 67,406 253,535 5,162 63,687 44,267 292,403 726,460

Details at 1 July 2002Cost 68,466 357,063 7,741 72,959 55,422 342,999 904,650Accumulated depreciation — 95,927 2,400 8,707 12,625 41,795 161,454

Depreciation chargefor 2003 — 7,155 156 751 348 8,096 16,506

MENU



15. DEPOSITS FROM CUSTOMERS

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Demand deposits 23,472,718 19,362,900 22,850,926 19,212,212Savings deposits 22,175,092 20,046,047 20,356,877 18,195,404Fixed deposits 72,410,709 68,960,725 52,390,449 48,830,798Negotiable instruments of deposits 5,307,423 1,165,057 1,270,625 598,887

123,365,942 109,534,729 96,868,877 86,837,301

(i) The maturity structure of fixed deposits and negotiable instruments of deposits are as follows:

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Due within six months 60,954,806 55,001,757 39,972,160 37,207,017Six months to one year 14,741,009 12,576,868 12,430,074 10,274,566One year to three years 1,475,255 2,245,554 907,992 1,661,805Three years to five years 366,119 300,864 330,805 286,217After five years 180,943 739 20,043 80

77,718,132 70,125,782 53,661,074 49,429,685

(ii) The deposits are sourced from the following customers:

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Business enterprises 54,758,525 45,735,587 40,966,747 33,514,277Individuals 60,000,360 48,883,483 52,297,622 43,848,874Others 8,607,057 14,915,659 3,604,508 9,474,150

123,365,942 109,534,729 96,868,877 86,837,301

MENU


16. DEPOSITS AND PLACEMENTS OF BANKS AND OTHER FINANCIAL INSTITUTIONS

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Licensed banks 9,516,899 9,293,612 10,091,985 9,353,988Licensed finance companies 342,118 324,189 400,815 574,055Licensed merchant banks 78,140 1,524 76,931 548Licensed discount houses 479,250 148,820 479,250 108,820Other financial institutions 4,081,799 3,904,387 3,128,356 2,758,344

14,498,206 13,672,532 14,177,337 12,795,755

17. OTHER LIABILITIES

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Interest payable 597,825 618,172 516,673 520,015Provision for outstanding claims 193,866 200,834 — —Unearned premium reserves 90,042 91,906 — —Provision for commitments and contingencies 991 300 — —Profit equalisation reserves (IBS operations) 167,108 65,549 134,311 42,372Provisions and accruals 528,112 478,245 399,270 338,340Due to brokers and clients 93,787 126,165 — —Deposits and other creditors 1,501,665 1,516,210 765,696 747,094

3,173,396 3,097,381 1,815,950 1,647,821

MENU



17. OTHER LIABILITIES (CONT’D.)

Movements in provisions are as follows:

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

For outstanding claims:

Balance at beginning of year 200,834 226,671 — —Provision made during the year 88,585 76,228 — —Utilised during the year (96,240) (112,400) — —Net assets of insurance business acquired — 9,412 — —Exchange differences 687 923 — —

Balance at end of year 193,866 200,834 — —

For commitments and contingencies:

Balance at beginning of year 300 300 — —Provision made during the year 691 — — —

Balance at end of year 991 300 — —

18. RECOURSE OBLIGATION ON LOANS SOLD TO CAGAMAS

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

At 1 July 2003/2002 6,661,965 6,394,409 2,289,153 2,270,149Amount sold during the year 2,060,880 1,821,199 1,060,835 521,066Repayment forwarded (2,190,799) (1,553,643) (638,870) (502,062)

At 30 June 2004/2003 6,532,046 6,661,965 2,711,118 2,289,153

This relates to proceeds received from conventional housing loans and hire purchase loans sold directly to CagamasBerhad with recourse to the Bank and its finance subsidiary, Mayban Finance Berhad. Under the agreement, theBank and the finance subsidiary undertake to administer the loans on behalf of Cagamas Berhad and to buy backany loans which are regarded as defective based on pre-determined and agreed-upon prudential criteria.

MENU


19. PROVISION FOR TAXATION AND ZAKAT

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Taxation 926,456 784,314 789,516 642,157Zakat 5,874 5,332 484 479

932,330 789,646 790,000 642,636

20. DEFERRED TAX

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

At 1 July 2003/2002 (1,102,220) (1,043,866) (855,546) (792,302)Recognised in the income statement

(net) (Note 34) (141,688) (57,376) (133,816) (63,244)Transfer to provision for taxation (7,866) — — —Exchange differences 937 (978) — —

At 30 June 2004/2003 (1,250,837) (1,102,220) (989,362) (855,546)

Presented after appropriate offsetting as follows:

Deferred tax assets, net (1,261,643) (1,110,840) (989,362) (855,546)Deferred tax liabilities, net 10,806 8,620 — —

Deferred tax assets and liabilities are offset when there is a legally enforceable rights to set-off current tax assetsagainst current tax liabilities and when the deferred income taxes relates to the same fiscal authority.

MENU



20. DEFERRED TAX (CONT’D.)

The components and movements of deferred tax assets and liabilities during the financial year prior to offsetting areas follows:

Deferred Tax Assets of the Group:

Provision forDiminution in

Loan Loss Value ofand Provisions Investments

and Interest/ and Provision OtherIncome Amortisation for Temporary

Suspended of Premiums Liabilities Differences Total

RM’000 RM’000 RM’000 RM’000 RM’000

At 1 July 2003 (992,933) (69,800) (75,332) (22,210) (1,160,275)Recognised in the

income statement (22,057) (70,199) (13,603) (36,877) (142,736)Transferred to provision

for taxation — 8,238 — — 8,238Exchange differences — — — 982 982

At 30 June 2004 (1,014,990) (131,761) (88,935) (58,105) (1,293,791)

At 1 July 2002 (928,799) (71,646) (71,383) (24,288) (1,096,116)Recognised in the

income statement (64,134) 1,846 (3,949) 3,040 (63,197)Exchange differences — — — (962) (962)

At 30 June 2003 (992,933) (69,800) (75,332) (22,210) (1,160,275)

MENU



Deferred Tax Liabilities of the Group:

Accretion ofAccelerated Discounts Other

Capital on TemporaryAllowance Investments Differences Total

RM’000 RM’000 RM’000 RM’000

At 1 July 2003 33,077 16,307 8,671 58,055Recognised in the income statement (970) 492 1,526 1,048Transferred to provision for taxation — (16,104) — (16,104)Exchange differences (47) 2 — (45)

At 30 June 2004 32,060 697 10,197 42,954

At 1 July 2002 30,991 11,253 10,006 52,250Recognised in the income statement 2,086 5,054 (1,319) 5,821Exchange differences — — (16) (16)

At 30 June 2003 33,077 16,307 8,671 58,055

MENU




Deferred Tax Assets of the Bank:


Loan Loss Value ofand Provisions Investments

and Interest/ and Provision OtherIncome Amortisation for Temporary

Suspended of Premiums Liabilities Differences Total

RM’000 RM’000 RM’000 RM’000 RM’000

At 1 July 2003 (741,340) (61,421) (60,457) (11,864) (875,082)Recognised in income statement (27,771) (69,984) (12,890) (25,743) (136,388)

At 30 June 2004 (769,111) (131,405) (73,347) (37,607) (1,011,470)

At 1 July 2002 (687,580) (63,504) (56,341) — (807,425)Recognised in income statement (53,760) 2,083 (4,116) (11,864) (67,657)

At 30 June 2003 (741,340) (61,421) (60,457) (11,864) (875,082)

Deferred Tax Liabilities of the Bank:

Accelerated Accretion ofCapital Discounts on

Allowance Investments Total

RM’000 RM’000 RM’000

At 1 July 2003 19,536 — 19,536Recognised in the income statement 2,572 — 2,572

At 30 June 2004 22,108 — 22,108

At 1 July 2002 15,061 62 15,123Recognised in the income statement 4,475 (62) 4,413

At 30 June 2003 19,536 — 19,536

MENU



Deferred tax assets have not been recognised in respect of the following items:

Group

2004 2003RM’000 RM’000

Unutilised tax losses 96,088 231,334Unabsorbed capital allowances 4,099 615Loan loss and provisions and interest suspended 36,824 47,248Others 9,191 12,688

146,202 291,885

The unutilised tax losses and unabsorbed capital allowances are available for offset against future taxable profits ofthe respective subsidiaries in which those items arose. Deferred tax assets have not been recognised in respect ofthose items as they may not be used to offset taxable profits of other subsidiaries in the Group. They have arisenin subsidiaries that have past losses of which the deferred tax assets are recognised to the extent that future taxableprofits will be available.

21. SUBORDINATED OBLIGATIONS

Group and Bank

2004 2003RM’000 RM’000

USD250 million subordinated notes due in 2005 950,000 950,000RM610 million subordinated bonds due in 2011 610,000 610,000USD380 million subordinated notes due in 2012 1,444,000 1,444,000

3,004,000 3,004,000

On 27 September 1995, the Bank issued USD250 million nominal value Subordinated Notes through its New YorkBranch. The Notes bear interest of 7.125% per annum payable semi-annually in arrears in March and September eachyear and are due in September 2005. The Notes will, subject to the prior consent of Bank Negara Malaysia, beredeemable in whole but not in part, at the option of the Bank in the event of changes affecting taxation in Malaysiaas described under “Terms and Conditions of the Notes – Optional Redemption upon the Imposition of Taxation”.

MENU



21. SUBORDINATED OBLIGATIONS (CONT’D.)

On 16 May 2001, the Bank issued RM610 million nominal value Subordinated Bonds with a fixed coupon rate of 5.65%per annum payable semi-annually in arrears in November and May each year, subject to the revision of interest explainedbelow and are due in May 2011. The Bank may, subject to the prior consent of Bank Negara Malaysia, redeem the Bonds,in whole but not in part, any time on or after the 5th year from Issue Date at 100% of the principal amount togetherwith accrued interest. Should the Bank decide not to exercise its call option on the first permissible call date, then thecoupon rate will be stepped up to 6.65% per annum from the beginning of the 6th year to the final maturity date.

On 6 June 2002, the Bank issued USD380 million nominal value Subordinated Notes with a fixed coupon rate of6.125% per annum payable semi-annually in arrears in January and July each year, subject to the revision of interestexplained below and are due in July 2012. The Bank may, subject to the prior consent of Bank Negara Malaysia,redeem the Notes, in whole but not in part, any time on or after the 5th year from issue date at 100% of theprincipal amount together with accrued interest. Should the Bank decide not to exercise its call option on the firstpermissible call date, then the coupon rate will be revised to an equivalent to 3.23% above the US Treasury Rateper annum from the beginning of the 6th year to the final maturity date.

All the Notes and Bonds above constitute unsecured liabilities of the Bank and are subordinated to the seniorindebtedness of the Bank in accordance with the respective terms and conditions of their issues and qualify as Tier2 capital for the purpose of determining the capital adequacy ratio of the Bank.

22. SHARE CAPITAL

Number of OrdinaryShares of RM1 Each Amount

2004 2003 2004 2003’000 ’000 RM’000 RM’000

Authorised:At 1 July 2003/2002 and 30 June 2004/2003 4,000,000 4,000,000 4,000,000 4,000,000

Issued and fully paid:At 1 July 2003/2002 3,589,465 3,550,181 3,589,465 3,550,181Bonus issue appropriated from retained profits 1,111 8,867 1,111 8,867Shares issued under the Maybank Group

Employee Share Option Scheme 9,596 30,417 9,596 30,417

At 30 June 2004/2003 3,600,172 3,589,465 3,600,172 3,589,465

MENU


22. SHARE CAPITAL (CONT’D.)

During the year, the Bank increased its issued and paid-up capital from RM3,589,464,821 to RM3,600,171,921 viaissuance of 9,596,000 new ordinary shares of RM1 each to eligible persons who exercised their options under theprevious Maybank Group Employee Share Option Scheme (ESOS) for cash. The corresponding bonus shares issuedunder the bonus entitlement (arising from the bonus issue of new ordinary shares granted by the Bank during thefinancial year 2002 on the basis of one (1) new ordinary share for every two (2) existing ordinary shares held, forthe existing options granted prior to the cut-off date of the bonus issue, 18 October 2001, each option holder wasentitled to 1 additional bonus share for every 2 existing options held when the options were exercised) when theoptions were exercised amounted to RM1,111,100.

The previous ESOS expired on 22 June 2003 and the balance of unutilised options over the ordinary shares andbonus entitlement lapsed on the same day.

The Board of Directors recommended a Proposed ESOS on 1 August 2003 after the expiry of the previous ESOS.The Proposed ESOS were approved by the Securities Commission (SC) and Bank Negara Malaysia vide their lettersdated 17 November 2003 and 19 January 2004 respectively. The Bank later obtained the SC’s approval vide its letterdated 17 May 2004 for an extension of time until 31 December 2004 to implement the Proposed ESOS.

The Bank has subsequently on 27 May 2004 proposed to revise, inter-alia, certain terms of the Proposed ESOS toincorporate recent changes to the SC’s Policies and Guidelines on Issue/Offer of Securities and the ListingRequirements of Bursa Malaysia Securities Berhad. The proposed changes to the Proposed ESOS entails, inter-alia,participation of non-executive directors, and increase in the maximum number of ordinary shares of RM1 each inthe Bank available for the Proposed ESOS from ten percent (10%) to fifteen percent (15%) of the total number ofissued and paid-up ordinary capital of the Bank at any point of time during the duration of the scheme. Otherprincipal features of the revised Proposed ESOS are as follows:

(a) The employees eligible to participate in the revised Proposed ESOS must be employed and on the payroll ofthe Bank and its subsidiaries for a continuous period of at least twenty four (24) months including serviceduring the probation period and is confirmed in service;

(b) The non-executive directors eligible to participate in the revised Proposed ESOS must have been a Non-ExecutiveDirector of the Group for a continuous period of at least twenty four (24) months;

MENU



22. SHARE CAPITAL (CONT’D.)

(c) The revised Proposed ESOS shall be in force for a period of five (5) years from its commencement and no furtheroptions under the proposed scheme will be granted thereafter unless the shareholders of the Bank in a generalmeeting agree to continue with the revised Proposed ESOS for a further period of five (5) years with or withoutvariations, and subject to the approvals of relevant authorities, provided that the duration of the revised ProposedESOS including any extension, if any, shall not exceed a total period of ten (10) years from its commencement;

(d) The new ordinary shares in the Bank to be allotted upon any exercise of options under the proposed schemewill upon allotment rank pari passu in all aspects with the then existing ordinary shares in the Bank, exceptthat the new ordinary shares so issued will not rank for any dividends or other distribution declared, made orpaid to shareholders prior to the date of allotment of such new ordinary shares, and will be subject to all theprovisions of the Article of Association of the Bank relating to transfer, transmission and otherwise; and

(e) The subscription price shall be at a discount, within the limit allowed by the relevant authorities from time totime and shall be decided by the ESOS Committee at its discretion, to the weighted average market price ofthe shares as shown in the daily official list issued by Bursa Malaysia Securities Berhad for the five (5) marketdays immediately preceding the date of offer, but shall in no event be less than the par value of the shares.

The Bank has obtained approval-in-principle of Bursa Malaysia Securities Berhad vide its letter dated 24 June 2004for the listing of such number of new ordinary shares to be issued pursuant to the exercise of options granted underthe revised Proposed ESOS at any time during the existence of the revised Proposed ESOS.

The approval from Bank Negara Malaysia for the revised Proposed ESOS has been obtained subsequent to thefinancial year end on 14 July 2004.

The revised Proposed ESOS has been approved by the shareholders in an Extraordinary General Meeting on 11 August 2004. The shareholders have also approved the resolution for the increase in the authorised ordinaryshare capital from RM4,000,000,000 to RM10,000,000,000 by the creation of an additional 6,000,000,000 newordinary shares of RM1 each in the same meeting.

MENU


23. RESERVES

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Non-distributable:Share premium 500,566 444,672 500,566 444,672Statutory reserves 4,274,198 3,746,207 3,636,325 3,113,225Capital reserve 15,250 15,250 — —Exchange fluctuation reserve 38,188 42,082 79,936 66,987

4,828,202 4,248,211 4,216,827 3,624,884

Distributable:Retained profits (Note 24) 6,195,062 5,647,557 4,282,034 4,062,078

Total reserves 11,023,264 9,895,768 8,498,861 7,686,962

The statutory reserves are maintained in compliance with the requirements of Bank Negara Malaysia and certainCentral Banks of the respective countries in which the Group and the Bank operate and is not distributable as cashdividends.

The capital reserve of the Group arose from the capitalisation of bonus issue in certain subsidiaries in previous years.

24. RETAINED PROFITS

As at 30 June 2004, the Bank has tax exempt profits available for distribution of approximately RM436,546,000(2003: RM366,024,000) before the proposed final dividend in respect of the current financial year ended 30 June2004, subject to the agreement of the Inland Revenue Board.

The Bank has sufficient tax credit under Section 108 of the Income Tax Act, 1967 and the balance in the tax exemptincome account to frank the payment of dividends out of its entire retained profits as at 30 June 2004.

MENU



25. OPERATING REVENUE

Operating revenue of the Group comprises all types of revenue derived from the businesses of banking, financecompany, general and life insurance (including takaful), stock broking, discount house, leasing and factoring, trusteeand nominee services, unit trust fund management, asset management and venture capital but excluding alltransactions between related companies.

Operating revenue of the Bank comprises gross interest income (after adding back net interest/income suspended),fee and commission income, investment income, gross dividends, income from Islamic Banking Scheme operationsand other income derived from banking operations.

26. INTEREST INCOME

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Loans, advances and financing 5,852,166 6,072,994 4,226,935 4,364,015Money at call and deposit placements

with financial institutions 941,425 799,611 863,104 756,629Dealing securities 42,200 54,338 17,166 11,289Investment securities 991,125 848,397 746,875 617,964Others 29,547 37,716 — —

7,856,463 7,813,056 5,854,080 5,749,897Amortisation of premiums less accretion

of discounts (67,746) (44,756) (93,494) (57,629)Net interest/income suspended (452,433) (563,568) (364,115) (426,404)

7,336,284 7,204,732 5,396,471 5,265,864

MENU


27. INTEREST EXPENSE

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Deposits and placements of banks andother financial institutions 417,281 404,669 362,728 366,014

Deposits from other customers 2,296,919 2,340,003 1,720,396 1,730,862Loans sold to Cagamas 294,492 301,255 117,476 106,109Floating rate certificates of deposits 4,141 13,591 4,141 13,591Subordinated notes 156,838 156,932 156,838 156,932Subordinated bonds 34,559 34,465 34,559 34,465Others 12,848 39,202 5,061 7,193

3,217,078 3,290,117 2,401,199 2,415,166

28. NON-INTEREST INCOME

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Fee income:

Commission 404,772 323,978 432,541 337,172Service charges and fees 426,319 341,448 328,918 272,267Guarantee fees 84,334 93,729 79,510 89,832Underwriting fees 8,235 3,056 2,807 198Brokerage income 68,323 25,669 — —Other fee income 29,891 26,580 18,653 17,484

1,021,874 814,460 862,429 716,953

MENU



28. NON-INTEREST INCOME (CONT’D.)

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Investment income:

Net (loss)/gain from sale of dealing securities (45,924) 42,427 (3,562) (2,667)Net gain on disposal of investment securities 179,025 157,478 143,735 126,895

133,101 199,905 140,173 124,228

Gross dividends from:

Investment securities– Quoted outside Malaysia 1,630 — — —– Quoted in Malaysia 16,642 17,472 12,665 2,127– Unquoted outside Malaysia 138 1,059 138 101– Unquoted in Malaysia 3,334 22,496 1,804 13,930

Subsidiaries in Malaysia — — 587,867 1,237,715Associated companies — — 1,350 1,350

21,744 41,027 603,824 1,255,223

Write back of provision/(provision) for diminutionin value of investment securities (net) 20,961 17,959 16,146 (661)

Provision for diminution in value ofinvestment in subsidiaries — — — (184,660)

20,961 17,959 16,146 (185,321)

Other income:

Foreign exchange profit 289,460 173,141 282,951 170,258Net premiums written 212,049 198,731 — —Rental income 7,090 6,439 10,422 12,290Gain on disposal of property, plant and equipment 8,029 16,299 7,593 11,439Gain on disposal of foreclosed properties 1,051 1,203 73 —Other operating income 25,071 37,234 41,494 32,608Other non-operating income 60,288 63,640 12,544 20,732

603,038 496,687 355,077 247,327

1,800,718 1,570,038 1,977,649 2,158,410

MENU


29. OVERHEAD EXPENSES

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Personnel expenses (Note 30) 1,273,594 1,149,222 974,371 864,022Establishment costs 511,600 473,835 412,325 363,493Marketing costs 138,754 112,725 114,555 84,669Administration and general expenses 667,340 600,335 484,974 416,497

2,591,288 2,336,117 1,986,225 1,728,681

Included in overhead expenses are:

Directors’ fees and remuneration (Note 31) 10,722 10,324 4,287 3,920Rental of leasehold land and premises 79,403 71,690 59,770 55,792Hire of equipment 6,342 6,632 4,856 4,976Lease of equipment — 6,971 155 730Auditors’ remuneration

– statutory audit fees 3,076 3,124 2,263 2,274– other fees 543 771 482 664

Provision for doubtful debts of other debtors 6,474 21,083 1,655 7,921Depreciation of property, plant

and equipment (Note 14) 180,645 178,865 138,617 127,208Impairment loss (Note 14) 237 346 — —Loss on disposal of property, plant

and equipment 520 3,514 — —Property, plant and equipment

written off (Note 14) 849 1,131 145 219

MENU



30. PERSONNEL EXPENSES

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Salaries and wages 1,022,445 876,630 789,536 708,382Social security cost 7,699 7,742 5,463 5,266Pension cost – defined contribution plan 146,154 128,511 112,223 99,348Other staff related expenses 97,296 136,339 67,149 51,026

1,273,594 1,149,222 974,371 864,022

31. DIRECTORS’ FEES AND REMUNERATION

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Directors of the Bank:

Executive directors:

Salary and other remuneration,including meeting allowance 1,755 1,597 1,587 1,469

Bonuses 1,010 750 1,010 750Pension cost – defined contribution plan 459 381 459 381Benefits-in-kind 242 82 242 82

3,466 2,810 3,298 2,682

Non-executive directors:

Fees 1,078 1,167 657 757Other remuneration 821 823 574 563Benefits-in-kind 59 59 59 59

1,958 2,049 1,290 1,379

MENU


31. DIRECTORS’ FEES AND REMUNERATION (CONT’D.)

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Directors of the Subsidiaries:

Executive directors:

Salary and other remuneration,including meeting allowance 3,768 3,675 — —

Bonuses 740 878 — —Pension cost – defined contribution plan 341 406 — —Benefits-in-kind 423 303 — —

5,272 5,262 — —

Non-executive directors:

Fees 459 393 — —Other remuneration 291 254 — —

750 647 — —

Total 11,446 10,768 4,588 4,061

Total (excluding benefits-in-kind) 10,722 10,324 4,287 3,920

The remuneration attributable to the President/Chief Executive Officer of the Bank including benefits-in-kind duringthe year amounted to RM1,523,144 (2003: RM1,241,563).

The total directors’ fees and remuneration of the Group above has excluded the amount of RM719,547 (2003:RM538,663) which has been allocated to the life, general takaful and family takaful funds.

MENU



31. DIRECTORS’ FEES AND REMUNERATION (CONT’D.)

Group

2004 2003RM’000 RM’000

Number of directors of the Bank whose remuneration fallsinto the following bands:

Number of executive directors:

Above RM1,000,000 1 1RM950,000 to RM1,000,000 1 —RM900,000 to RM950,000 1 —RM800,001 to RM850,000 — 1RM750,001 to RM800,000 — 1

3 3

Number of non-executive directors:

RM650,001 to RM700,000 1 1RM250,000 to RM300,000 1 —RM200,001 to RM250,000 3 3RM150,001 to RM200,000 1 1RM100,001 to RM150,000 1 3RM50,001 to RM100,000 1 —

8 8

11 11

MENU


32. LOAN AND FINANCING LOSS AND PROVISIONS

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Provision for bad and doubtful debtsand financing:– Specific (net) 679,398 930,434 578,478 752,820– General 132,688 189,756 84,768 130,586

Bad debts and financing:– Written off 43,558 7,074 13,928 5,548– Recovered (355,075) (215,416) (234,507) (94,125)

500,569 911,848 442,667 794,829Written back on recoveries of amounts

receivable from Danaharta (5,207) — (4,671) —

495,362 911,848 437,996 794,829

33. SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES

The Bank’s significant transactions and balances with related parties are as follows:

Bank

2004 2003RM’000 RM’000

Transactions with subsidiaries and associates:Income:Interest on deposits 62,878 74,094Interest on loans and advances 745 40,358Dividend income 589,217 1,239,065Rental of premises 2,568 6,186Other income 66,118 39,383

721,526 1,399,086

MENU



33. SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES (CONT’D.)

Bank

2004 2003RM’000 RM’000

Transactions with subsidiaries and associates (Cont’d.):Expenditure:Interest on deposits 7,848 20,216Other expenses 18,413 19,824Subscription fee paid to an associate 5,192 4,997

31,453 45,037

Other transactions:Acquisition of unquoted private debt securities with face value

of RM570,000,000 (2003: RM1,015,000,000) from a subsidiary 525,814 1,020,844Acquisition of an investment with carrying value of RM114,473,284

from a subsidiary as part of the settlement of a loan(after an interest waiver of RM15,893,303) owedby the subsidiary in the previous financial year — 145,068

Transaction with other related party:Professional fees paid to a firm which the spouse of an executive director

is a partner 1,016 2,691

The directors are of the opinion that all the transactions above have been entered into in the normal course ofbusiness and have been established on terms and conditions that are not materially different from those obtainablein transactions with unrelated parties.

MENU


33. SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES (CONT’D.)

Transaction with other related party (Cont’d.):Included in the balance sheet of the Bank are amounts due from/(to) subsidiaries and an associate represented bythe following:

Bank

2004 2003RM’000 RM’000

Amounts due from subsidiaries:

Current accounts and deposits 1,683,264 4,644,877Loans, advances and financing 16,394 93,051Interest and other receivable on deposits 146,660 84,626

1,846,318 4,822,554

Amounts due to subsidiaries:

Current accounts and deposits (3,798,743) (2,635,288)Interest payable on deposits (24,563) (22,495)

(3,823,306) (2,657,783)

Deposits by an associate 3,750 8,902

MENU



34. TAXATION AND ZAKAT

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Tax expense for the year:Malaysian income tax 1,047,033 799,644 920,522 896,935Foreign tax 51,791 39,082 46,622 37,339Less: Double taxation relief (42,833) (32,295) (42,271) (31,055)

1,055,991 806,431 924,873 903,219Over provision in respect of prior years:Malaysian income tax (27,406) (187,220) — (157,365)

1,028,585 619,211 924,873 745,854

Deferred tax (Note 20):Relating to originating and reversal of

temporary differences (net) (124,021) (57,376) (118,798) (63,244)Overprovision in prior years (17,667) — (15,018) —

(141,688) (57,376) (133,816) (63,244)

Share of tax in associates 744 431 — —

887,641 562,266 791,057 682,610Zakat 869 983 247 237

888,510 563,249 791,304 682,847

Domestic income tax is calculated at the Malaysian statutory tax rate of 28% (2003: 28%) of the estimated assessableprofit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

MENU


34. TAXATION AND ZAKAT (CONT’D.)

A reconciliation of income tax expense applicable to profit before taxation at the statutory income tax rate to incometax expense at the effective income tax rate of the Group and of the Bank is as follows:

Group 2004 2003

RM’000 RM’000

Profit before taxation 3,358,597 2,619,674

Taxation at Malaysian statutory tax rate of 28% (2003: 28%) 940,407 733,509Effect of different tax rates in other tax jurisdictions (19,382) (12,201)Effect of income not subject to tax (10,815) (11,778)Effect of expenses not deductible for tax purposes 51,100 50,455Effect of utilisation of previously unrecognised tax losses and capital allowances (30,153) (23,168)Deferred Tax assets not recognised during the year 1,557 12,669Over provision in deferred tax in prior years (17,667) —Over provision in prior years (27,406) (187,220)

Tax expense for the year 887,641 562,266

BankProfit before taxation 2,883,375 2,737,899

Taxation at Malaysian statutory tax rate of 28% (2003: 28%) 807,345 766,612Effect of different tax rates in other countries 4,351 6,284Effect of income not subject to tax (23,719) (5,689)Effect of expenses not deductible for tax purposes 18,098 72,768Over provision in deferred tax in prior years (15,018) —Over provision in prior years — (157,365)

Tax expense for the year 791,057 682,610

MENU



34. TAXATION AND ZAKAT (CONT’D.)

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Tax savings recognised during the yeararising from:

Utilisation of previously unrecognised tax losses 32,088 23,072 — —Utilisation of current year absorbed

capital allowance 4,809 5,690 — —Utilisation of unabsorbed capital allowances

previously not recognised 2,587 4,092 — —

35. EARNINGS PER SHARE

The basic and diluted EPS of the Group and the Bank are calculated by dividing the net profit for the year by theweighted average number of ordinary shares in issue during the financial year.

Group Bank

2004 2003 2004 2003

Net profit for the year (RM’000) 2,424,511 1,996,489 2,092,071 2,055,052

Weighted average number of ordinary sharesin issue (’000) 3,600,171 3,569,377 3,600,171 3,569,377

Basic and diluted EPS (sen) 67.3 55.9 58.1 57.6

The weighted average number of ordinary shares in issue for the previous financial year ended 30 June 2003 hasbeen adjusted for the effects of the shares issued under the ESOS bonus entitlement (see Note 22) during the yearfor comparative purposes.

As at the balance sheet date of the current financial year, there is no outstanding arrangement which can potentiallygive rise to material and dilutive ordinary shares.

MENU


36. DIVIDENDS

Group and Bank Net Dividend Per Share

2004 2003 2004 2003RM’000 RM’000 Sen Sen

Interim dividend of 10% (2003: 10%)less 28% taxation 259,212 257,396 7.2 7.2

Special dividend of 25% (2003: Nil)less 28% taxation 648,031 — 18.0 —

Interim tax exempt dividend of Nil% (2003: 25%) — 893,737 — 25.0Final dividend of 7% less 28% taxation

in respect of year ended 30 June 2002 — 179,156 — 5.0Final dividend of 17% less 28% taxation

in respect of year ended 30 June 2003 440,661 — 12.2 —

1,347,904 1,330,289 37.4 37.2

At the Annual General Meeting, the final dividend in respect of the financial year ended 30 June 2003 of 17% less28% taxation on 3,600,171,921 ordinary shares, amounting to a dividend of RM440,661,043 (12.2 sen net pershare) was approved by the shareholders and is accounted for in the shareholders’ equity as an appropriation ofretained profits in the financial year ended 30 June 2004.

At the forthcoming Annual General Meeting, a final dividend in respect of the financial year ended 30 June 2004of 25% less 28% taxation on 3,600,171,921 ordinary shares, amounting to a dividend payable of RM648,030,946(18.0 sen net per ordinary share) will be proposed for shareholders’ approval. The financial statements for the currentfinancial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will beaccounted for in equity as an appropriation of retained profits in the next financial year ending 30 June 2005.

MENU



37. COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Bank and its subsidiaries make various commitments and incur certain contingentliabilities with legal recourse to their customers. No material losses are anticipated as a result of these transactions.

Risk-weighted exposures of the Bank and its subsidiaries as at 30 June, are as follows:

2004 2003

Credit CreditPrincipal Equivalent Principal EquivalentRM’000 RM’000 RM’000 RM’000

GroupDirect credit substitutes 5,001,641 5,001,641 4,730,987 4,730,987Certain transaction-related contingent items 6,148,365 3,074,182 5,572,629 2,786,315Short-term self-liquidating trade

related contingencies 9,175,025 1,835,005 5,762,397 1,152,479Islamic housing and hire purchase loans sold to

Cagamas Berhad 466,374 466,374 552,609 552,609Obligations under underwriting agreements 1,205,999 603,000 1,013,610 505,055Obligations arising out of rediscounting

of bankers’ acceptances — — 8,278 331Irrevocable commitments to extend credit:

– Maturity within one year 31,752,801 — 33,298,081 —– Maturity exceeding one year 5,020,827 2,510,418 4,509,141 2,254,571

Foreign exchange related contracts:– Less than one year 21,417,468 281,949 13,700,376 174,810– One year to less than five years 1,227,109 21,306 1,064,920 26,370– Five years and above — — 82,463 22,101

Interest rate related contracts:– Less than one year 2,007,854 15,226 1,166,295 6,233– One year to less than five years 5,526,783 301,410 3,794,351 475,999– Five years and above 1,182,018 104,463 1,212,167 152,219

Miscellaneous 2,244,595 — 2,058,768 —

92,376,859 14,214,974 78,527,072 12,840,079

MENU


37. COMMITMENTS AND CONTINGENCIES (CONT’D.)

Risk weighted exposures of the Bank and its subsidiaries as at 30 June, are as follows (Cont’d.):

2004 2003


BankDirect credit substitutes 3,445,070 3,445,070 3,161,733 3,161,733Certain transaction-related contingent items 6,139,622 3,069,811 5,565,332 2,782,666Short-term self-liquidating trade

related contingencies 9,158,506 1,831,701 5,742,188 1,148,438Islamic housing loans sold to Cagamas Berhad 114,380 114,380 127,268 127,268Obligations under underwriting agreements 344,013 172,006 776,878 388,439Irrevocable commitments to extend credit:

– Maturity within one year 30,816,965 — 32,323,256 —– Maturity exceeding one year 3,595,083 1,797,542 3,084,131 1,542,066

Foreign exchange related contracts:– Less than one year 21,415,585 281,949 13,036,744 164,877– One year to less than five years 1,208,094 21,306 1,064,920 26,370– Five years and above — — 82,463 22,101

Interest rate related contracts:– Less than one year 2,007,854 15,226 1,166,295 6,233– One year to less than five years 5,254,708 296,450 3,794,351 475,999– Five years and above 1,167,018 103,463 1,212,167 152,129

Miscellaneous 2,242,382 — 2,056,076 —

86,909,280 11,148,904 73,193,802 9,998,319

The Bank and certain subsidiaries are contingently liable in respect of Islamic housing loans sold to Cagamas Berhadon the condition that they undertake to administer the loans on behalf of Cagamas Berhad and to buy back anyloans which are regarded as defective based on pre-determined and agreed-upon prudential criteria.

MENU



37. COMMITMENTS AND CONTINGENCIES (CONT’D.)

Foreign exchange and interest rate related contracts are subject to market risk and credit risk. Principal amounts ofthe foreign exchange related contracts and interest rate related contracts are as follows:

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Foreign exchange related contracts:– Forward and futures contracts 8,422,825 6,167,092 8,401,927 6,165,646– Swaps 14,221,752 8,680,667 14,221,752 8,018,481

Interest rate related contracts:– Forward and futures contracts 24,956 38,000 13,000 38,000– Swaps 8,684,640 6,134,813 8,416,580 6,134,813

31,354,173 21,020,572 31,053,259 20,356,940

Market riskMarket risk is the potential change in value caused by movement in market rates or prices. The contractual amountsstated above provide only a measure of involvement in these types of transactions and do not represent the amountssubject to market risk. Exposure to market risk may be reduced through offsetting on and off-balance sheet positions.

Credit riskCredit risk arises from the possibility that a counterparty may be unable to meet the terms of a contract in whichthe Bank and certain subsidiaries have a gain position. This amount will increase or decrease over the life of thecontracts, mainly as a function of maturity dates and market rates or prices.

As at 30 June, the amounts of market risk and credit risk are as follows:

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Market riskAmount of contracts which were not hedged

and hence, exposed to market risk 76,182 84,426 76,182 84,426

Credit riskAmount of credit risk, measured in terms of

cost to replace the profitable contracts 52,643 69,896 52,643 55,962

MENU


38. FINANCIAL RISK MANAGEMENT POLICIES

Risk Management is a critical pillar of the Group’s operating model, complementing the other two pillars, which arecustomer sector and support and services sector. As part of the Group’s strategy to integrate the management andcontrol of risks across the various risk segments, a dedicated Board committee known as the Risk ManagementCommittee was established. The Committee is responsible for formulating policies and the oversight of the key risksfaced by the Group including credit, market, liquidity and operational risks with the objective of containing thenegative impact to the Group’s earnings should losses arise from exposures to these risks.

The broad principles that underpin the risk management process at the Group are as follows:

(a) The risk management approach is premised on three lines of defence – Risk Taking Units, Risk Control Unitswhich are under Group Risk Management, and Internal Audit.

(b) The Risk Taking Units are responsible for the day-to-day management of risks inherent in their business activitieswhile the Risk Control Units are responsible for setting the risk management framework and developing tools andmethodologies for the identification, measurement, monitoring, control and pricing of risks. Complementing thisis Internal Audit which provides independent assurance of the effectiveness of the risk management approach.

(c) Group Risk Management provides risk oversight for the major risk categories including credit risk, market risk,liquidity risk, operational risk and other industry-specific risks.

(d) Group Risk Management ensures that core policies of the Group are consistent, sets the risk tolerance leveland facilitates the implementation of an integrated risk-adjusted measurement framework.

(e) Group Risk Management is functionally and organisationally independent of the customer sectors and other risktakers in the Group.

(f) The Board of Directors through the Risk Management Committee maintains overall responsibility for riskoversight within the Group.

(g) Group Risk Management is responsible for the execution of various risk policies and related decisions of the Board.

MENU



38. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D.)

The followings are the key risk areas that the Group encounters:

(a) Credit Risk ManagementIn discharging this responsibility, Group Credit Risk Unit is primarily involved in managing and enhancingasset quality, formulating and reviewing credit policies as well as the documentation/compilation of creditpolicies and procedures for adherence. Group Credit Risk also sets and reviews concentration limitsaccording to various categories such as single customer groups, economic segments, product types, banksand countries, and overseas credit portfolio risk.

(b) Market Risk ManagementGroup Market Risk Unit continually evaluates risk arising from adverse movements in market prices or ratesand monitors compliance to approved policies and risk limits. Market risk profiles are regularly reported tothe various levels of management, as well as the Risk Management Committee and the Board of Directors.

Market risk controls adopted include the “Value-at-Risk” (“VaR”) measurement, independent mark-to-market valuations, on-line tracking of various risk limits for trading positions, stress testing of portfolios,back testing of risk models and new product introduction guidelines.

(c) Liquidity Risk ManagementThe primary mechanism and tool for monitoring liquidity is the cash flow behaviour of the Bank. Thisframework ascertains liquidity based on the contractual and behavioural cash flow of assets, liabilities andoff-balance sheet commitments, taking into consideration the realisable cash value of eligible liquid assets.

The Group maintains a minimum level of liquid assets although there is no such regulatory requirement.These assets are maintained in the form of cash and marketable debt securities that are issued by bothsovereigns and triple-A rate private entities.

(d) Operational Risk ManagementThe Risk Taking Units (including the support units) are primary parties responsible for the management ofday-to-day operational risk inherent in their respective business and functional areas. While GroupOperational Risk Unit is responsible for the second line of defence, Group Internal Audit acts as the thirdline of defence by overseeing compliance in respect of day-to-day management of operational risks at theRisk Taking Units and providing independent assessments regarding the overall effectiveness of theoperational risk management framework.

Further information on the framework and the principles for the management of risks of the Group aredisclosed in the annual report.

MENU


39. INTEREST RATE RISK

The Group and Bank are exposed to various risk associated with the effects of fluctuations in the prevailing levelsof market interest rates on the financial position and cash flows. Interest rate risk exposure is identified, measured,monitored and controlled through limits and procedures set by the Asset and Liability Management Committee(“ALCO”) to protect total net interest income from changes in market interest rates.

The table below summarises the Group’s and Bank’s exposure to interest rate risk. The table indicates effectiveaverage interest rates at the balance sheet date and the periods in which the financial instruments reprice or mature,whichever is earlier.

Non- EffectiveGroup Up to 1 >1 – 3 >3 – 6 >6 – 12 >1 – 5 Over 5 interest interest2004 month months months months years years sensitive Total rate

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %

AssetsCash and short-term

funds 16,656,570 — — — — — 6,352,510 23,009,080 2.34Deposits and

placements withbanks and otherfinancial institutions 601,925 5,116,254 613,626 32,542 50,948 — 271,495 6,686,790 2.23

Securities purchasedunder resaleagreements 447,861 285,770 — — — — — 733,631 2.89

Dealing securities 140,868 28,519 86,139 — 15,941 28,089 1 299,557 3.34Investment securities 2,370,154 4,316,710 1,767,088 1,232,731 10,234,239 4,574,382 4,208,116 28,703,420 3.89Loans, advances

and financing– performing 45,055,816 10,137,529 3,913,737 3,326,750 17,103,632 12,118,310 14,277,153 105,932,927 6.76– non-performing* — — — — — — 3,137,564 3,137,564 —

Other assets — — — — — — 2,076,427 2,076,427 —Other non-interest

sensitive balances — — — — — — 6,307,571 6,307,571 —Life, general takaful

and family takafulfund assets — — — — — — 2,620,460 2,620,460 —

Total Assets 65,273,194 19,884,782 6,380,590 4,592,023 27,404,760 16,720,781 39,251,297 179,507,427

MENU



39. INTEREST RATE RISK (CONT’D.)

Non- EffectiveGroup (Cont’d.) Up to 1 >1 – 3 >3 – 6 >6 – 12 >1 – 5 Over 5 interest interest2004 month months months months years years sensitive Total rate


Liabilities andShareholders’Equity

Deposits fromcustomers 57,311,992 12,431,417 8,140,437 13,259,462 1,569,671 160,900 30,492,063 123,365,942 2.34

Deposits andplacements ofbanks and otherfinancial institutions 4,225,866 1,358,413 782,110 159,002 2,072,098 477,213 5,423,504 14,498,206 1.85

Obligations onsecurities soldunder repurchaseagreements 6,334,774 490,847 162,410 — — — — 6,988,031 2.19

Bills and acceptancespayable 194,752 582,375 169,315 1,725 — — 2,371,262 3,319,429 2.76

Recourse obligationon loans soldto Cagamas 26,486 — 391,098 338,201 5,776,261 — — 6,532,046 4.45

Provision fortaxation and zakat — — — — — — 932,330 932,330 —

Subordinatedobligations — — — — 3,004,000 — — 3,004,000 6.34

Other liabilities — — — — — — 3,173,396 3,173,396 —Other non-interest

sensitive balances — — — — — — 10,806 10,806 —Life, general takaful

and family takafulfund liabilities — — — — — — 101,491 101,491 —

Life, general takafuland family takafulpolicy holders’funds — — — — — — 2,518,969 2,518,969 —

Total Liabilities 68,093,870 14,863,052 9,645,370 13,758,390 12,422,030 638,113 45,023,821 164,444,646

MENU





Shareholders’ equity — — — — — — 14,623,436 14,623,436 —Minority interests — — — — — — 439,345 439,345 —

— — — — — — 15,062,781 15,062,781

Total Liabilitiesand Shareholders’Equity 68,093,870 14,863,052 9,645,370 13,758,390 12,422,030 638,113 60,086,602 179,507,427

On-balance sheetinterest sensitivitygap (2,820,676) 5,021,730 (3,264,780) (9,166,367) 14,982,730 16,082,668 (20,835,305) —

Off-balance sheetinterest sensitivitygap (interest rateswaps) 1,745,972 (1,290,790) 711,535 (448,548) 555,431 (1,273,600) — —

Total interestsensitivity gap (1,074,704) 3,730,940 (2,553,245) (9,614,915) 15,538,161 14,809,068 (20,835,305) —

Cumulativeinterest ratesensitivity gap (1,074,704) 2,656,236 102,991 (9,511,924) 6,026,237 20,835,305 —

* This is arrived at after deducting the general provision, specific provision and interest/income-in-suspense from gross non-performing loansoutstanding.

MENU




Non- EffectiveGroup Up to 1 >1 – 3 >3 – 6 >6 – 12 >1 – 5 Over 5 interest interest2003 month months months months years years sensitive Total rate




placements withbanks and other financialinstitutions 149,176 4,928,743 278,486 30,065 — — 265,809 5,652,279 2.54

Securities purchasedunder resaleagreements 585,008 — — — — — — 585,008 1.34

Dealing securities 234,414 65,233 10,713 8,866 146,407 310,995 8 776,636 4.19Investment securities 3,010,930 2,432,032 1,402,597 2,860,493 6,432,232 3,986,987 5,005,982 25,131,253 3.80Loans, advances


Other assets — — — — — — 2,048,591 2,048,591 —Other non-interest

sensitive balances — — — — — — 5,869,752 5,869,752 —Life, general takaful

and family takafulfund assets — — — — — — 1,763,779 1,763,779 —

Total Assets 63,451,035 16,262,228 5,992,646 4,905,441 22,277,035 15,798,423 32,268,589 160,955,397

MENU






Deposits from customers 47,247,271 12,500,985 7,690,639 11,186,355 2,585,689 413 28,323,377 109,534,729 2.46

Deposits and placements ofbanks and otherfinancial institutions 4,712,229 4,333,542 429,705 8,537 1,864,298 204,700 2,119,521 13,672,532 2.21

Obligations onsecurities soldunder repurchaseagreements 5,206,013 35,640 3,498 — — — 141,421 5,386,572 2.44

Bills andacceptancespayable 832,552 858,892 144,069 679 — — 1,314,798 3,150,990 2.85

Recourse obligationon loans soldto Cagamas — 296,238 497,919 515,990 5,351,818 — — 6,661,965 4.38

Provision for taxationand zakat — — — — — — 789,646 789,646 —


Other liabilities — — — — — — 3,097,381 3,097,381 —Other non-interest

sensitive balances — — — — — — 8,620 8,620 —Life, general takaful

and family takafulfund liabilities — — — — — — 107,443 107,443 —

Life, general takafuland family takaful policy holders’ funds — — — — — — 1,656,336 1,656,336 —


MENU






Shareholders’ equity — — — — — — 13,485,233 13,485,233 —Minority interests — — — — — — 399,950 399,950 —

— — — — — — 13,885,183 13,885,183


On-balance sheetinterest sensitivitygap 5,452,970 (1,763,069) (2,773,184) (6,806,120) 9,471,230 15,593,310 (19,175,137) —

Off-balance sheetinterest sensitivitygap (interest rateswaps) 97,400 (1,108,936) (2,650,604) 135,257 3,621,883 (95,000) — —

Total interestsensitivity gap 5,550,370 (2,872,005) (5,423,788) (6,670,863) 13,093,113 15,498,310 (19,175,137) —

Cumulativeinterest ratesensitivity gap 5,550,370 2,678,365 (2,745,423) (9,416,286) 3,676,827 19,175,137 —


MENU



Non- EffectiveBank Up to 1 >1 – 3 >3 – 6 >6 – 12 >1 – 5 Over 5 interest interest2004 month months months months years years sensitive Total rate


AssetsCash and

short-term funds 14,058,132 — — — — — 5,469,695 19,527,827 2.39Deposits and

placements withbanks and otherfinancial institutions 76,485 4,415,603 1,260,762 114,784 — — 261,854 6,129,488 2.12

Securities purchasedunder resaleagreements 437,122 285,770 — — — — — 722,892 2.89

Dealing securities 65,730 11,938 86,139 — — — — 163,807 2.94Investment securities 2,160,076 3,391,603 1,697,530 944,350 7,559,964 3,475,339 3,471,278 22,700,140 3.87Loans, advances


Other assets — — — — — — 827,980 827,980 —Other non-interest

sensitive balances — — — — — — 6,760,603 6,760,603 —

Total Assets 59,095,356 17,117,516 5,688,518 3,687,070 16,710,608 9,932,834 31,319,247 143,551,149

MENU







Deposits fromcustomer 40,402,190 8,734,186 6,155,196 11,148,256 989,981 — 29,439,068 96,868,877 2.23

Deposits andplacements ofbanks and otherfinancialinstitutions 3,794,636 1,496,301 774,147 159,226 2,072,028 471,549 5,409,450 14,177,337 1.77

Obligations onsecurities soldunder repurchaseagreements 5,685,430 490,847 162,410 — — — — 6,338,687 2.14

Bills and acceptancespayable 1,135,518 1,796,394 465,938 1,725 — — 2,346,572 5,746,147 2.78

Recourse obligationon loans soldto Cagamas 26,486 — 391,098 — 2,293,534 — — 2,711,118 4.59



Other liabilities — — — — — — 1,815,950 1,815,950 —


Shareholders’ equity — — — — — — 12,099,033 12,099,033 —


MENU





On-balance sheetinterest sensitivitygap 8,051,096 4,599,788 (2,260,271) (7,622,137) 8,351,065 9,461,285 (20,580,826) —

Off-balance sheetinterest sensitivitygap (interest rateswaps) 1,700,972 (1,506,790) 711,535 (448,548) 801,431 (1,258,600) — —

Total interestsensitivity gap 9,752,068 3,092,998 (1,548,736) (8,070,685) 9,152,496 8,202,685 (20,580,826) —

Cumulativeinterest ratesensitivity gap 9,752,068 12,845,066 11,296,330 3,225,645 12,378,141 20,580,826 —


MENU








placements withbanks and otherfinancial institutions 108,773 5,953,835 937,005 — — — 256,326 7,255,939 2.54

Securities purchasedunder resaleagreements 582,003 — — — — — — 582,003 1.33

Dealing securities — — — 8,879 48,438 39,681 — 96,998 3.53Investment securities 2,427,056 2,216,802 924,526 2,047,856 4,608,415 2,943,275 3,567,892 18,735,822 3.64Loans, advances


Other assets — — — — — — 740,411 740,411 —Other non-interest

sensitive balances — — — — — — 6,392,194 6,392,194 —

Total Assets 57,894,098 15,039,900 5,028,625 3,901,490 12,564,540 7,959,777 25,265,897 127,654,327

MENU



Non- EffectiveBank (Cont’d.) Up to 1 >1 – 3 >3 – 6 >6 – 12 >1 – 5 Over 5 interest interest2003 month months months months years years sensitive Total rate



Deposits fromcustomers 36,333,550 8,273,244 5,568,169 9,029,089 1,993,867 80 25,639,302 86,837,301 2.36

Deposits andplacementsof banks andother financialinstitutions 4,181,381 4,318,769 428,705 7,494 1,864,225 197,717 1,797,464 12,795,755 2.26

Obligations onsecurities soldunder repurchaseagreements 4,888,020 35,640 3,498 — — — 141,420 5,068,578 2.42

Bills and acceptancespayable 863,581 1,358,503 246,439 1,562 — — 1,622,571 4,092,656 2.89

Recourse obligationon loans soldto Cagamas — 39,841 — 413,917 1,835,395 — — 2,289,153 4.49





MENU




Non- EffectiveBank (Cont’d.) Up to 1 >1 – 3 >3 – 6 >6 – 12 >1 – 5 Over 5 interest interest2003 month months months months years years sensitive Total rate


Shareholders’ equity — — — — — — 11,276,427 11,276,427 —


On-balance sheetinterest sensitivitygap 11,627,566 1,013,903 (1,218,186) (5,550,572) 3,867,053 7,761,980 (17,501,744) —

Off-balance sheetinterest sensitivity gap(interest rate swaps) 97,400 (1,108,936) (2,650,604) 135,257 3,621,883 (95,000) — —

Total interestsensitivity gap 11,724,966 (95,033) (3,868,790) (5,415,315) 7,488,936 7,666,980 (17,501,744) —

Cumulative interestrate sensitivitygap 11,724,966 11,629,933 7,761,143 2,345,828 9,834,764 17,501,744 —


MENU


40. YIELD/PROFIT RATE RISK ON IBS PORTFOLIO

The Group and Bank are exposed to the risk associated with the effects of fluctuations in the prevailing levels ofyield/profit rate on the financial position and cash flows of the IBS portfolio. The fluctuations in yield/profit rate canbe influenced by changes in interest rates that affect the value of financial instruments under the IBS portfolio.Yield/profit rate risk is monitored and managed by the Asset and Liability Management Committee (“ALCO”) toprotect the income from IBS operations.

The table below summarises the Group’s and Bank’s exposure to yield/profit rate risk for the IBS operations. Thetable indicates effective average yield/profit rates at the balance sheet date and the periods in which the financialinstruments either reprice or mature, whichever is earlier.

Non-yield/ EffectiveGroup Up to 1 >1 – 3 >3 – 6 >6 – 12 >1 – 5 Over 5 profit rate yield/profit2004 month months months months years years sensitive Total rate



funds 2,912,710 — — — — — 211 2,912,921 2.70Deposits and

placements withbanks and otherfinancial institutions — 51,200 — — — — 38,370 89,570 2.83

Investment securities 542,037 517,878 424,403 287,627 1,171,335 153,599 14,350 3,111,229 3.23Loans and financing

– performing 370,061 1,185,785 858,322 785,014 1,399,493 9,678,478 — 14,277,153 8.31– non-performing* — — — — — — 304,364 304,364 —

Other assets — — — — — — 25,331 25,331 —Other non-yield/profit

rate sensitivebalances — — — — — — 203,058 203,058 —

Total Assets 3,824,808 1,754,863 1,282,725 1,072,641 2,570,828 9,832,077 585,684 20,923,626

MENU



40. YIELD/PROFIT RATE RISK ON IBS PORTFOLIO (CONT’D.)

Non-yield/ EffectiveGroup (Cont’d.) Up to 1 >1 – 3 >3 – 6 >6 – 12 >1 – 5 Over 5 profit rate yield/profit2004 month months months months years years sensitive Total rate


Liabilities and IslamicBanking Fund

Deposits from customers 4,920,830 1,416,903 969,185 1,231,226 116,534 20,043 3,063,365 11,738,086 2.73Deposits and placements

of banks and otherfinancial institutions 2,973,352 1,015,868 185,079 — 1,523 49,721 2,204 4,227,747 2.71

Bills and acceptancespayable 445,935 696,624 289,437 — — — 1,327 1,433,323 2.70



Total Liabilities 8,340,117 3,129,395 1,443,701 1,231,226 118,057 69,764 5,291,599 19,623,859

Islamic banking fund — — — — — — 1,299,767 1,299,767 —

Total Liabilities and Islamic Banking Fund 8,340,117 3,129,395 1,443,701 1,231,226 118,057 69,764 6,591,366 20,923,626

On-balance sheetyield/profit ratesensitivity gap (4,515,309) (1,374,532) (160,976) (158,585) 2,452,771 9,762,313 (6,005,682) —

Cumulative yield/profit ratesensitivity gap (4,515,309) (5,889,841) (6,050,817) (6,209,402) (3,756,631) 6,005,682 —

* This is arrived at after deducting the general provision, specific provision and income-in-suspense from gross non-performing financingoutstanding.

MENU



Non-yield/ EffectiveGroup Up to 1 >1 – 3 >3 – 6 >6 – 12 >1 – 5 Over 5 profit rate yield/profit2003 month months months months years years sensitive Total rate



funds 359,400 — — — — — 343 359,743 1.47Deposits and

placements withbanks and otherfinancial institutions — 85,000 42,000 — — — 39,471 166,471 2.88

Investment securities 713,560 919,909 580,079 367,589 400,603 205,699 14,351 3,201,790 3.30Loans and financing

– performing 93,769 838,829 581,953 612,448 1,753,486 7,481,970 — 11,362,455 8.07– non-performing* — — — — — — 340,983 340,983 —


rate sensitive balances — — — — — — 108,106 108,106 —

Total Assets 1,166,729 1,843,738 1,204,032 980,037 2,154,089 7,687,669 541,971 15,578,265


Deposits from customers 4,332,625 1,733,622 948,614 1,774,434 64,632 — 2,308,331 11,162,258 2.76Deposits and

placements ofbanks and otherfinancial institutions 687,535 248,829 440,700 — 3,247 33,781 1,085 1,415,177 2.76

Bills and acceptancespayable 197,138 177,244 207,965 — — — 323 582,670 2.93




MENU




Non-yield/ EffectiveGroup (Cont’d.) Up to 1 >1 – 3 >3 – 6 >6 – 12 >1 – 5 Over 5 profit rate yield/profit2003 month months months months years years sensitive Total rate


Islamic banking fund — — — — — — 1,310,382 1,310,382 —

Total Liabilities andIslamic Banking Fund 5,217,298 2,159,695 1,597,279 1,774,434 67,879 33,781 4,727,899 15,578,265

On-balance sheetyield/profitrate sensitivity gap (4,050,569) (315,957) (393,247) (794,397) 2,086,210 7,653,888 (4,185,928) —



MENU



Non-yield/ EffectiveBank Up to 1 >1 – 3 >3 – 6 >6 – 12 >1 – 5 Over 5 profit rate yield/profit2004 month months months months years years sensitive Total rate



funds 2,605,169 — — — — — — 2,605,169 2.72Deposits and

placements withbanks and otherfinancial institutions — 58,600 — — — — 6,370 64,970 2.83

Investment securities 499,014 389,819 414,521 118,587 614,770 — 14,350 2,051,061 2.79Loans and financing

– performing 368,567 1,183,393 851,694 759,117 695,785 7,984,783 — 11,843,339 8.03– non-performing* — — — — — — 338,761 338,761 —



Total Assets 3,472,750 1,631,812 1,266,215 877,704 1,310,555 7,984,783 512,728 17,056,547


Deposits from customers 3,829,641 1,026,862 813,590 1,095,127 108,728 20,043 3,063,365 9,957,356 2.68Deposits and placements

of banks and otherfinancial institutions 2,746,579 1,015,802 185,079 — 1,522 49,721 2,297 4,001,000 2.71

Bills and acceptancespayable 445,935 696,624 289,437 — — — 1,327 1,433,323 2.70


Other liabilities — — — — — — 870,100 870,100 —


MENU




Non-yield/ EffectiveBank (Cont’d.) Up to 1 >1 – 3 >3 – 6 >6 – 12 >1 – 5 Over 5 profit rate yield/profit2004 month months months months years years sensitive Total rate


Islamic banking fund — — — — — — 699,284 699,284 —

Total Liabilities andIslamic Banking Fund 7,022,155 2,739,288 1,288,106 1,095,127 110,250 69,764 4,731,857 17,056,547

On-balance sheetyield/profit ratesensitivity gap (3,549,405) (1,107,476) (21,891) (217,423) 1,200,305 7,915,019 (4,219,129) —

Cumulative yield/profitrate sensitivity gap (3,549,405) (4,656,881) (4,678,772) (4,896,195) (3,695,890) 4,219,129 —


MENU



Non-yield/ EffectiveBank Up to 1 >1 – 3 >3 – 6 >6 – 12 >1 – 5 Over 5 profit rate yield/profit2003 month months months months years years sensitive Total rate



funds 207,400 — — — — — — 207,400 1.59Deposits and placements

with banks and otherfinancial institutions — 85,000 42,000 — — — 7,472 134,472 2.88Investment securities 546,494 771,623 424,457 186,229 185,160 — 14,350 2,128,313 2.93

Loans and financing– performing 93,769 838,829 581,953 601,594 730,042 6,678,116 — 9,524,303 8.12– non-performing* — — — — — — 334,182 334,182 —



Total Assets 847,663 1,695,452 1,048,410 787,823 915,202 6,678,116 443,799 12,416,465


Deposits from customers 3,046,132 1,051,805 836,701 1,628,388 53,226 — 2,308,080 8,924,332 2.63Deposits and placements

of banks and otherfinancial institutions 579,858 50,000 440,000 — 3,247 33,781 1,085 1,107,971 2.75

Bills and acceptancespayable 382,445 326,397 207,965 — — — 322 917,129 2.93


Other liabilities — — — — — — 772,448 772,448 —


MENU




Non-yield/ EffectiveBank (Cont’d.) Up to 1 >1 – 3 >3 – 6 >6 – 12 >1 – 5 Over 5 profit rate yield/profit2003 month months months months years years sensitive Total rate


Islamic banking fund — — — — — — 624,606 624,606 —

Total Liabilities and Islamic Banking Fund 4,008,435 1,428,202 1,484,666 1,628,388 56,473 33,781 3,776,520 12,416,465

On-balance sheet yield/profit ratesensitivity gap (3,160,772) 267,250 (436,256) (840,565) 858,729 6,644,335 (3,332,721) —



41. FOREIGN EXCHANGE RISK

Foreign exchange risk is the risk to earnings and value of foreign currency assets, liabilities and derivative financialinstruments caused by fluctuations in foreign exchange rates.

The banking activities of providing financial products and services to customers expose the Group and the Bank toforeign exchange risk. Foreign exchange risk is managed by treasury function, and monitored by Group RiskManagement against delegated limits. The Group’s policy is to ensure, where appropriate and practical, that itscapital is protected from foreign exchange exposures. Hedging against foreign exchange exposures is mainly toprotect the real economic value, rather than to avoid the short-term accounting impact.

MENU


41. FOREIGN EXCHANGE RISK (CONT’D.)

The table below analyses the net foreign exchange positions of the Group and the Bank by major currencies, whichare mainly in Ringgit Malaysia, Singapore Dollar, the Great Britain Pound, Hong Kong Dollar and US Dollar. The“Others” foreign exchange risk include mainly exposure to Euro, Japanese Yen, Renminbei, Philippines Peso,Indonesia Rupiah, Papua New Guinea Kina and Brunei Dollars.

Great Hong UnitedGroup Malaysian Singapore Britain Kong States2004 Ringgit Dollar Pound Dollar Dollar Others Total

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

AssetsCash and short-term funds 16,248,673 262,003 66,354 8,492 5,776,362 647,196 23,009,080Deposits and placements

with banks and otherfinancial institutions 4,092,663 105,879 55 5 2,437,085 51,103 6,686,790

Securities purchasedunder resale agreements 676,266 57,365 — — — — 733,631

Dealing securities 182,875 — — — 50,461 66,221 299,557Investment securities 22,790,877 2,138,856 — 140,701 3,363,672 269,314 28,703,420Loans, advances

and financing 86,444,484 12,840,305 12,696 258,037 8,723,368 791,601 109,070,491Statutory deposits

with Central Banks 3,122,298 412,315 — — 20,295 89,291 3,644,199Investment in associates 12,221 — — — 6,686 — 18,907Property, plant and

equipment 1,028,846 313,470 5,207 1,766 4,075 29,458 1,382,822Other assets 1,674,739 79,943 2,819 31,048 180,017 107,861 2,076,427Deferred tax assets 1,261,643 — — — — — 1,261,643Life and Family Takaful

fund assets 2,620,460 — — — — — 2,620,460

Total Assets 140,156,045 16,210,136 87,131 440,049 20,562,021 2,052,045 179,507,427

MENU




Great Hong UnitedGroup Malaysian Singapore Britain Kong States2004 (Cont’d.) Ringgit Dollar Pound Dollar Dollar Others Total

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

LiabilitiesDeposits from customers 99,352,109 14,215,588 114,467 150,453 7,853,549 1,679,776 123,365,942Deposits and placements

of banks and otherfinancial institutions 8,557,136 175,523 22,464 344,431 5,280,115 118,537 14,498,206

Obligations on securitiessold underrepurchase agreements 6,116,478 — — — 871,553 — 6,988,031

Bills and acceptancespayable 3,157,554 33,693 — 209 122,688 5,285 3,319,429

Recourse obligation onloans sold to Cagamas 6,532,046 — — — — — 6,532,046

Provision for taxation andzakat 754,535 173,097 — 26 2,800 1,872 932,330

Subordinated obligations 610,000 — — — 2,394,000 — 3,004,000Other liabilities 2,685,024 229,875 29,634 55,678 133,303 39,882 3,173,396Deferred taxation 10,806 — — — — — 10,806Life and Family Takaful

fund liabilities 101,491 — — — — — 101,491Life and Family Takaful

policy holders’ funds 2,518,969 — — — — — 2,518,969

Total Liabilities 130,396,148 14,827,776 166,565 550,797 16,658,008 1,845,352 164,444,646

On-balance sheetopen position 9,759,897 1,382,360 (79,434) (110,748) 3,904,013 206,693 15,062,781

Off-balance sheetopen position 4,032,726 (425,211) 82,755 87,998 (3,822,506) 44,238 —

Net open position 13,792,623 957,149 3,321 (22,750) 81,507 250,931 15,062,781

Net structural positionincluded in the above — — 23,934 49,699 — 266,073 339,706

MENU




RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000


with banks and otherfinancial institutions 3,005,918 152,696 20,115 4 2,473,546 — 5,652,279


Dealing securities 564,044 50,138 — — — 162,454 776,636Investment securities 20,642,769 1,505,193 1,872 76,233 2,614,131 291,055 25,131,253Loans, advances

and financing 83,091,164 10,920,985 88,027 358,013 7,088,330 941,951 102,488,470Statutory deposits

with Central Banks 2,918,304 346,974 — — 17,302 39,058 3,321,638Investment in associates 12,448 — — — 4,853 — 17,301Property, plant and

equipment 1,065,947 309,147 4,573 1,807 3,575 34,924 1,419,973Other assets 1,664,090 76,424 4,209 27,527 202,042 74,299 2,048,591Deferred tax assets 1,109,870 — — — — 970 1,110,840Life and Family Takaful

fund assets 1,763,779 — — — — — 1,763,779

Total Assets 128,000,784 13,980,518 282,831 469,470 16,355,843 1,865,951 160,955,397

MENU





RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

LiabilitiesDeposits from customers 89,445,100 12,229,617 316,515 153,965 6,285,016 1,104,516 109,534,729Deposits and placements


Obligations on securitiessold under repurchaseagreements 4,817,297 — — — 569,275 — 5,386,572

Bills and acceptancespayable 2,984,656 30,360 — 124 568 135,282 3,150,990


Provision fortaxation and zakat 635,308 147,774 — 4,853 1,620 91 789,646

Subordinated obligations 610,000 — — — 2,394,000 — 3,004,000Other liabilities 2,595,737 197,697 5,450 41,278 205,291 51,928 3,097,381Deferred taxation 8,594 24 — — — 2 8,620Life and Family Takaful

fund liabilities 107,443 — — — — — 107,443Life and Family Takaful

policy holders’ funds 1,656,336 — — — — — 1,656,336

Total Liabilities 114,921,634 12,798,077 323,242 496,547 17,160,228 1,370,486 147,070,214

On-balance sheetopen position 13,079,150 1,182,441 (40,411) (27,077) (804,385) 495,465 13,885,183

Off-balance sheetopen position (783,969) (560,755) 40,481 (1,381) 1,981,543 (675,919) —

Net open position 12,295,181 621,686 70 (28,458) 1,177,158 (180,454) 13,885,183


MENU



Great Hong UnitedBank Malaysian Singapore Britain Kong States2004 Ringgit Dollar Pound Dollar Dollar Others Total

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000


with banks and otherfinancial institutions 2,725,575 110,096 — — 3,112,898 180,919 6,129,488

Securities purchased under resale agreements 665,527 57,365 — — — — 722,892

Dealing securities 113,346 — — — 50,461 — 163,807Investment securities 17,339,184 2,034,802 — 134,426 3,099,317 92,411 22,700,140Loans, advances and

financing 68,228,060 12,840,304 12,696 258,037 4,986,724 392,591 86,718,412Statutory deposits

with Central Banks 2,406,000 412,315 — — 20,295 17,024 2,855,634Investment in subsidiaries 1,490,997 24,438 — — 27,060 326,734 1,869,229Investment in associates 3,600 — — — 6,140 — 9,740Property, plant and

equipment 724,095 301,574 5,207 1,762 4,000 — 1,036,638Other assets 553,824 58,673 2,819 30,606 179,352 2,706 827,980Deferred tax assets 834,089 155,273 — — — — 989,362

Total Assets 109,480,474 16,250,861 84,451 433,300 16,134,514 1,167,549 143,551,149

MENU




Great Hong UnitedBank Malaysian Singapore Britain Kong States2004 (Cont’d.) Ringgit Dollar Pound Dollar Dollar Others Total

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

LiabilitiesDeposits from customers 77,975,920 14,241,108 112,995 160,491 3,564,276 814,087 96,868,877Deposits and placements of

banks and otherfinancial institutions 8,238,682 175,593 22,464 344,450 5,287,913 108,235 14,177,337

Obligations on securitiessold under repurchaseagreements 5,467,134 — — — 871,553 — 6,338,687



Provision for taxation andzakat 614,224 173,013 — — 2,763 — 790,000

Subordinated obligations 610,000 — — — 2,394,000 — 3,004,000Other liabilities 1,448,972 154,623 29,632 53,055 126,919 2,749 1,815,950

Total Liabilities 102,773,364 14,778,030 165,091 558,205 12,248,223 929,203 131,452,116

On-balance sheetopen position 6,707,110 1,472,831 (80,640) (124,905) 3,886,291 238,346 12,099,033

Off-balance sheetopen position 4,032,726 (425,211) 82,755 87,998 (3,822,506) 44,238 —

Net open position 10,739,836 1,047,620 2,115 (36,907) 63,785 282,584 12,099,033


MENU



Great Hong UnitedBank Malaysian Singapore Britain Kong States2003 Ringgit Dollar Pound Dollar Dollar Others Total

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000


with banks and otherfinancial institutions 3,061,596 154,858 20,087 — 3,868,342 151,056 7,255,939


Dealing securities 24,988 50,138 — — — 21,872 96,998Investment securities 14,729,305 1,421,618 1,872 71,839 2,357,560 153,628 18,735,822Loans, advances and

financing 64,903,229 10,920,985 88,026 358,013 3,421,057 469,044 80,160,354Statutory deposits

with Central Banks 2,236,000 346,974 — — 17,297 21,128 2,621,399Investment in subsidiaries 1,148,247 23,869 — — 27,060 669,537 1,868,713Investment in associates 3,600 — — — 6,140 — 9,740Property, plant and

equipment 729,869 297,068 4,573 1,804 3,482 — 1,036,796Other assets 441,698 61,333 4,205 28,651 201,606 2,918 740,411Deferred tax assets 855,546 — — — — — 855,546

Total Assets 98,197,346 13,892,185 273,841 466,133 13,087,140 1,737,682 127,654,327

MENU




Great Hong UnitedBank Malaysian Singapore Britain Kong States2003 (Cont’d.) Ringgit Dollar Pound Dollar Dollar Others Total

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

LiabilitiesDeposits from customers 70,313,606 12,250,170 307,927 154,544 3,076,658 734,396 86,837,301Deposits and placements


Obligations on securitiessold underrepurchase agreements 4,499,303 — — — 569,275 — 5,068,578



Provision fortaxation and zakat 488,521 147,672 — 4,843 1,600 — 642,636

Subordinated obligations 610,000 — — — 2,394,000 — 3,004,000Other liabilities 1,259,882 134,835 5,446 41,101 202,954 3,603 1,647,821

Total Liabilities 87,960,768 12,755,640 314,649 496,939 14,036,589 813,315 116,377,900

On-balance sheetopen position 10,236,578 1,136,545 (40,808) (30,806) (949,449) 924,367 11,276,427

Off-balance sheetopen position (783,969) (560,755) 40,481 (1,381) 1,639,816 (334,192) —

Net open position 9,452,609 575,790 (327) (32,187) 690,367 590,175 11,276,427


MENU



Net structural foreign currency position represents the Group’s and the Bank’s net investment in overseas operations.This position comprises the net assets of the Group’s and the Bank’s overseas branches, investments in overseassubsidiaries and long term investments in overseas properties.

Where possible, the Group and the Bank mitigate the effect of currency exposures by funding the overseasoperations with borrowings and deposits received in the same functional currencies of the respective overseaslocations. The foreign currency exposures are also hedged using foreign exchange derivaties.

The structural currency exposures of the Group and the Bank as at the balance sheet dates are as follows:

Structuralcurrency Hedges by Net

exposures funding in Other structuralGroup in overseas respective currency currencyCurrency of structural exposures operations currencies hedges exposures

RM’000 RM’000 RM’000 RM’000

2004Singaporean Dollar 107,115 — (107,115) —Great Britain Pound 23,934 — — 23,934Hong Kong Dollar 49,699 — — 49,699United States Dollar 487,096 (487,096) — —Others 266,073 — — 266,073

933,917 (487,096) (107,115) 339,706


796,222 (388,302) (72,695) 335,225

MENU




Structuralcurrency Hedges by Net

exposures funding in Other structuralBank in overseas respective currency currencyCurrency of structural exposures operations currencies hedges exposures

RM’000 RM’000 RM’000 RM’000


524,850 (47,659) (106,983) 370,208


479,762 (41,802) (72,565) 365,395

MENU


42. FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES

Financial instruments comprise financial assets, financial liabilities and also off-balance sheet derivatives. The fair valueof a financial instrument is the amount at which the instrument could be exchanged or settled between knowledgeableand willing parties in an arm’s length transaction, other than in a forced or liquidation sale. The information presentedherein represents best estimates of fair values of financial instruments at the balance sheet date.

Quoted and observable market prices, where available, are used as the measure of fair values. However, for asignificant portion of the Group’s and the Bank’s financial instruments, including loans, advances and financing tocustomers, where such market prices are not available, various methodologies have been used to estimate theapproximate fair values of such instruments. These methodologies are significantly affected by the assumptions usedand judgements made regarding risk characteristics of various financial instruments, discount rates, estimates of futurecash flows, future expected loss experience and other factors. Changes in the assumptions could significantly affectthese estimates and the resulting fair value estimates. Therefore, for a significant portion of the Group's and theBank’s financial instruments, including loans, advances and financing to customers, their respective fair value estimatesdo not purport to represent, nor should they be construed to represent, the amounts that the Group and the Bankcould realise in a sale transaction at the balance sheet date. The fair value information presented herein should alsoin no way be construed as representative of the underlying value of the Group and the Bank as a going concern.

The on-balance sheet financial assets and financial liabilities of the Group and the Bank whose fair values are requiredto be disclosed in accordance with MASB Standard 24 comprise all its assets and liabilities with the exception ofinvestments in subsidiaries, investments in associated companies, property, plant and equipment, provision for currentand deferred taxation, life and family takaful fund assets, and life and family takaful fund liabilities. The informationon the fair values of financial assets and financial liabilities of the life and family takaful fund is disclosed in Note 49.

The estimated fair values of those on-balance sheet financial assets and financial liabilities as at the balance sheet dateapproximate their carrying amounts as shown in the balance sheets, except for the following financial assets and liabilities:

2004 2003

Carrying CarryingValue Fair Value Value Fair Value

Group RM’000 RM’000 RM’000 RM’000

Financial assetsDealing securities 299,557 299,627 776,636 780,910Investment securities 28,703,420 29,133,479 25,131,253 26,253,195Loans, advances and financing* 112,691,498 113,580,313 105,962,910 107,340,337

MENU



42. FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES (CONT’D.)

2004 2003

Carrying Fair Value Carrying Fair ValueValue Assets Value Assets

Group (Cont’d.) RM’000 RM’000 RM’000 RM’000

Financial liabilitiesDeposits from customers 123,365,942 123,463,433 109,534,729 109,587,796Deposits and placements of banks

and other financial institutions 14,498,206 14,576,508 13,672,532 13,712,657Recourse obligation on loans sold to Cagamas 6,532,046 7,549,003 6,661,965 6,717,043Subordinated obligations 3,004,000 3,045,185 3,004,000 3,221,342

2004 2003

Carrying Fair Value Carrying Fair ValueValue Assets Value Assets

Bank RM’000 RM’000 RM’000 RM’000

Financial assetsDealing securities 163,807 163,877 96,998 97,003Investment securities 22,700,140 23,006,890 18,735,822 19,686,759Loans, advances and financing* 89,407,829 90,590,964 82,750,589 83,625,118

Financial liabilitiesDeposits from customers 96,868,877 96,938,439 86,837,301 86,873,913Deposits and placements of banks

and other financial institutions 14,177,337 14,255,640 12,795,755 12,835,877Recourse obligation on loans sold to Cagamas 2,711,118 2,790,359 2,289,153 2,337,467Subordinated obligations 3,004,000 3,045,185 3,004,000 3,221,342

* The general provisions for the Group and the Bank amounting to RM3,621,007,000 (2003: RM3,474,440,000)and RM2,689,417,000 (2003: RM2,590,235,000) respectively have been added back to arrive at the carrying valueof the loans, advances and financing.

MENU



The fair values of unrecognised financial instruments at the balance sheet date are as follows:

2004 2003

Nominal Fair Value Fair Value Nominal Fair Value Fair ValueAmount – Assets – Liabilities Amount – Assets – LiabilitiesRM’000 RM’000 RM’000 RM’000 RM’000 RM’000

GroupDerivative financial

instrumentsForeign exchange contracts:

– Forwards and futures 8,422,825 16,277 (29,204) 6,167,092 19,781 (22,582)– Swaps 14,221,752 31,268 (39,371) 8,680,667 27,094 (43,813)

Interest rate contracts– Forwards and futures 24,956 — (5) 38,000 — (3)– Swaps 8,684,640 183,294 (153,525) 6,134,813 303,024 (387,619)

BankDerivative financial

instrumentsForeign exchange contracts:

– Forwards and futures 8,401,927 16,277 (29,204) 6,165,646 19,781 (22,582)– Swaps 14,221,752 31,268 (39,371) 8,018,481 27,094 (43,813)

Interest rate contracts– Forwards and futures 13,000 — (5) 38,000 — (3)– Swaps 8,416,580 187,264 (153,525) 6,134,813 303,024 (387,619)

Included in the fair value of the unrecognised financial instruments above is an amount of RM31,981,000 (2003:RM84,856,000) relating to the instruments that qualify as hedges, which gains and losses are deferred and amortisedover the life of respective instruments to match against the corresponding amounts of the hedged instruments.

MENU




The following methods and assumptions are used to estimate the fair values of the following classes of financialinstruments:

(a) Cash and Short-term FundsThe carrying amount approximates fair value due to the relatively short maturity of the financial instruments.

(b) Deposits and Placements with Financial Institutions, Securities Purchased under Resale Agreement,Obligations on Securities Sold under Repurchase Agreement and Bills and Acceptances PayableThe fair values of those financial instruments with remaining maturities of less than one year approximate theircarrying values due to their relatively short maturities. For those financial instruments with maturities of morethan one year, the fair values are estimated based on discounted cash flows using applicable prevailing marketrates of similar remaining maturities at the balance sheet date.

(c) Dealing and Investment SecuritiesFair values of securities that are actively traded is determined by quoted bid prices. For non-actively tradedsecurities, independent broker quotations are obtained. Fair values of equity securities are estimated using anumber of methods, including net tangible assets, earnings multiples and discounted cash flow analysis. Wherediscounted cash flow technique is used, the estimated future cash flows are discounted using applicableprevailing market or indicative rates of similar instruments at the balance sheet date.

(d) Loans, Advances and FinancingThe fair values of variable rate loans are estimated to approximate their carrying values. For fixed rate loansand Islamic financing, the fair values are estimated based on expected future cash flows of contractualinstalment payments, discounted at applicable and prevailing rates at balance sheet date offered for similarfacilities to new borrowers with similar credit profiles. In respect of non-performing loans, the fair values aredeemed to approximate the carrying values which are net of interest/income-in-suspense and specific provisionfor bad and doubtful debts and financing.

(e) Deposits from Customers, Deposits and Placements of Banks and Other Financial InstitutionsThe fair values of deposits payable on demand and deposits and placements with maturities of less than one yearapproximate their carrying values due to the relatively short maturity of these instruments. The fair values of fixeddeposits and placements with remaining maturities of more than one year are estimated based on discounted cashflows using applicable rates currently offered for deposits and placements with similar remaining maturities. Thefair value of Islamic deposits are estimated to approximate their carrying values as the profit rates are determinedat the end of their holding periods based on the actual profits generated from the assets invested.

MENU



(f) Recourse Obligation on Loans Sold to CagamasThe fair values of recourse obligation on housing and hire purchase loans sold to Cagamas are determinedbased on the discounted cash flows of future instalment payments at applicable prevailing Cagamas rates asat balance sheet date.

(g) Subordinated ObligationsThe fair values of subordinated obligations are estimated by discounting the expected future cash flows usingthe applicable prevailing interest rates for borrowings with similar risks profiles.

(h) Derivative Financial InstrumentsFair values of derivative instruments are normally zero or negligible at inception and the subsequent change invalue is favourable (assets) or unfavourable (liabilities) as a result of fluctuations in market interest rates or foreignexchange rates relative to their terms. The fair values of the Group’s and the Bank’s derivative instruments areestimated by reference to quoted market prices. Internal models are used where no market price is available.

43. CAPITAL AND OTHER COMMITMENTS

(a) Capital expenditure approved by directors but not provided for in the financial statements amounted to:

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Approved and contracted for 177,951 182,974 158,507 157,528Approved but not contracted for 376,918 284,622 318,802 223,186

554,869 467,596 477,309 380,714

(b) Uncalled capital in shares of subsidiaries — — 280 280

MENU



43. CAPITAL AND OTHER COMMITMENTS (CONT’D.)

(c) The Bank and a subsidiary are committed to lend up to five times the nominal value of its investment in ExportCredit Insurance Corporation of Singapore Limited (“ECIC”) to meet claims arising as part of the export creditinsurance business of the company. ECIC may, at its option, convert the whole or any part of any such loansinto fully paid shares.

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Maximum commitments in respectof the investment in ECIC 11,048 10,791 11,048 10,791

44. CAPITAL ADEQUACY

The capital adequacy ratios of the Group and the Bank as at 30 June, are as follows:

Group Bank

2004 2003 2004 2003

Without deducting proposed dividend*:

Core capital ratio 10.89% 10.65% 11.54% 11.45%Risk-weighted capital ratio 15.62% 15.68% 14.74% 14.94%

After deducting proposed dividend:

Core capital ratio 10.37% 10.28% 10.86% 10.96%Risk-weighted capital ratio 15.10% 15.30% 14.07% 14.46%

* In arriving at the capital base used in the ratio calculations of the Group and the Bank, the proposed dividendsfor respective financial years were not deducted.

MENU


44. CAPITAL ADEQUACY (CONT’D.)

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Tier 1 capitalPaid-up share capital 3,600,172 3,589,465 3,600,172 3,589,465Share premium 500,566 444,672 500,566 444,672Other reserves 10,469,260 9,393,764 7,918,359 7,175,303Tier 1 minority interest 203,504 202,943 — —Less: Deferred tax assets (1,261,643) (1,110,840) (989,362) (855,546)

Total Tier 1 capital 13,511,859 12,520,004 11,029,735 10,353,894

Tier 2 capitalSubordinated obligations 2,244,000 2,434,000 2,244,000 2,434,000General provision for bad and

doubtful debts and financing 3,621,007 3,474,440 2,689,417 2,590,235

Total Tier 2 capital 5,865,007 5,908,440 4,933,417 5,024,235

Total capital 19,376,866 18,428,444 15,963,152 15,378,129Less: Investment in subsidiaries — — (1,869,229) (1,868,713)

Capital base 19,376,866 18,428,444 14,093,923 13,509,416

The breakdown of risk-weighted assets (excluding deferred tax assets) in the various categories of risk-weights areas follows:

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

0% 35,572,499 27,325,491 30,621,181 21,460,82210% 2,270,884 4,262,725 1,614,342 3,233,65020% 27,069,500 19,972,166 22,171,435 18,700,58350% 22,537,394 19,877,897 18,331,996 15,615,461100% 107,121,785 103,153,554 81,791,926 78,508,104

194,572,062 174,591,833 154,530,880 137,518,620

MENU



45. SEGMENT INFORMATION

Segment information is presented in respect of the Group’s business and geographical segments.

The primary format, business segment information, is prepared based on internal management reports, which areused by senior management for decision-making and performance management. The amounts for each businesssegment are shown after the allocation of certain centralised cost, funding income and the applicable transfer pricingwhere appropriate. Transactions between segments are recorded within the segment as if they are third partytransactions and are eliminated on consolidation. All inter-segment transactions are conducted at arm’s length basison normal commercial terms that are not more favourable than those generally available to public.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can beallocated on a reasonable basis.

Capital expenditure comprises additions to property, plant and equipment.

(a) Primary Segment – By Business SegmentThe Group comprises the following main business segments:

(i) BankingThe Banking segment focuses on business of banking in all its aspects which also include IBS operations.Its activities are generally structured into two key areas, Retail Financial Services (“RFS”) and EnterpriseFinancial Services (“EFS”).

RFS comprises the full range of products and services offered to individuals, including savings and fixeddeposits, remittance services, current accounts, consumer loans such as housing loans and personal loans,unit trusts, bancassurance products and credit cards.

EFS provides a full range of financial services to business customers, ranging from large corporates andthe public sector to small and medium enterprises. The products and services offered include long-termloans such as project financing, short-term credit such as overdrafts and trade financing, and fee-basedservices such as cash management and custodian services.

(ii) FinanceThe Finance segment focuses on business of a licensed finance company (including IBS operations) whichprovides products and services to individual customers and small and medium enterprises, concentratingon hire purchase financing, leasing, block discounting and other retail based loans products.

MENU


45. SEGMENT INFORMATION (CONT’D.)

(a) Primary Segment – By Business Segment (Cont’d.)(iii) Investment Banking

The Investment Banking segment includes business of a merchant bank, discount house and securitiesbroker. This segment focuses on business needs of mainly large corporate customers and financialinstitutions. The products and services offered to customers include direct lending, advisory bankingservices, bond issuance, equity financing, syndicated financing, mergers and acquisitions advisory services,debt restructuring advisory services, and share and futures dealings.

(iv) Insurance and TakafulThe insurance and takaful segment includes the business of underwriting all classes of general and lifeinsurance businesses, offshore investment life insurance business, general takaful and family takafulbusinesses.

(v) OthersThe “Others” segment includes asset and fund management, nominee and trustee services and custodianservices.

Group Investment Insurance2004 Banking Finance Banking and Takaful Others Elimination Consolidated

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

REVENUE

External revenue 7,921,836 1,827,585 451,180 247,931 72,388 — 10,520,920

Dividends from subsidiaries 589,217 7,188 40,821 34,652 875 (672,753) —Other inter-segment

revenue 163,861 18,346 3,450 28,089 15,442 (229,188) —

Total inter-segment revenue 753,078 25,534 44,271 62,741 16,317 (901,941) —

Total revenue 8,674,914 1,853,119 495,451 310,672 88,705 (901,941) 10,520,920

Segment results – operating profit 3,418,683 766,129 174,164 128,556 35,827 (672,753) 3,850,606

Loan and financing lossand provisions (537,018) 3,965 37,691 — — — (495,362)

Share of results ofassociated companies — 740 — — 2,613 — 3,353

MENU




(a) Primary Segment – By Business Segment (Cont’d.)


RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

REVENUE (CONT’D.)

Profit before taxationand zakat 2,881,665 770,834 211,855 128,556 38,440 (672,753) 3,358,597

Taxation and zakat (794,711) (185,818) (22,693) (23,067) (12,895) 150,674 (888,510)

Profit after taxationand zakat 2,086,954 585,016 189,162 105,489 25,545 (522,079) 2,470,087

Minority interests (45,576)

Net profit for the year 2,424,511

ASSETS AND LIABILITIES

Segment assets 151,903,745 22,825,694 9,290,211 4,151,352 297,089 (8,979,571) 179,488,520Investment in

associated companies — 5,564 — — 13,343 — 18,907

Total assets 151,903,745 22,831,258 9,290,211 4,151,352 310,432 (8,979,571) 179,507,427

Total segment liabilities 139,196,376 20,239,120 7,954,472 2,970,054 160,359 (6,075,735) 164,444,646

OTHER INFORMATION

Capital expenditure 145,727 2,745 5,331 1,086 4,415 — 159,304Depreciation 141,205 22,067 6,624 8,227 2,522 — 180,645Non-cash expenses/(income)

other than depreciation 453,752 72,979 (12,814) (1,201) 2,686 — 515,402

MENU





RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

REVENUE

External revenue 7,418,224 1,900,683 431,519 230,426 56,758 — 10,037,610

Dividends from subsidiaries 1,239,067 12,150 19,619 33,002 948 (1,304,786) —Other inter-segment

revenue 170,840 35,732 3,888 26,439 14,304 (251,203) —

Total inter-segment revenue 1,409,907 47,882 23,507 59,441 15,252 (1,555,989) —

Total revenue 8,828,131 1,948,565 455,026 289,867 72,010 (1,555,989) 10,037,610

Segment results– operating profit 3,813,844 724,838 166,429 135,687 (4,395) (1,304,786) 3,531,617

Loan and financingloss and provisions (882,064) (25,030) (4,320) — (434) — (911,848)

Share of results ofassociated companies — (1,170) (27) — 1,102 — (95)

Profit before taxationand zakat 2,931,780 698,638 162,082 135,687 (3,727) (1,304,786) 2,619,674

Taxation and zakat (684,845) (172,949) (19,800) (39,675) (8,136) 362,156 (563,249)

Profit after taxationand zakat 2,246,935 525,689 142,282 96,012 (11,863) (942,630) 2,056,425

Minority interests (59,936)

Net profit for the year 1,996,489

MENU






RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

ASSETS AND LIABILITIES

Segment assets 136,588,647 23,448,341 9,174,514 3,422,565 364,101 (12,060,072) 160,938,096Investment in

associated companies — 4,852 — — 12,449 — 17,301

Total assets 136,588,647 23,453,193 9,174,514 3,422,565 376,550 (12,060,072) 160,955,397

Total segment liabilities 123,911,537 20,967,618 7,927,115 2,124,921 157,075 (8,018,052) 147,070,214

OTHER INFORMATION

Capital expenditure 209,240 10,065 5,183 1,948 33,101 — 259,537Depreciation 129,127 25,498 7,099 8,319 8,822 — 178,865Non-cash expenses/

(income) other than depreciation 699,804 123,608 11,298 10,032 5,069 (184,660) 665,151

(b) Secondary Segment – By Geographical LocationsIn presenting information on the basis of geographical segments, segment revenue is based on geographicallocations of customers. Segment assets are based on the geographical locations of assets.

The Group has operations in Malaysia, Singapore, Indonesia, Philippines, Papua New Guinea, Brunei Darussalam,People's Republic of China, Hong Kong SAR, Vietnam, United Kingdom, United States of America, Cambodiaand Bahrain.

With the exception of Malaysia and Singapore, no other individual country contributed more than 5% of theconsolidated revenue before operating expenses and of total assets.

MENU



(b) Secondary Segment – By Geographical Locations (Cont’d.)

Total Revenue Profit beforefrom External Capital Segment Taxation

Customers Expenditure Assets and Zakat

RM’000 RM’000 RM’000 RM’000

2004Malaysia 10,178,040 125,023 162,568,597 3,813,808Singapore 756,503 18,475 17,579,299 144,215Others 488,318 15,806 8,339,102 73,327

11,422,861 159,304 188,486,998 4,031,350Elimination (901,941) — (8,979,571) (672,753)

Group 10,520,920 159,304 179,507,427 3,358,597

2003Malaysia 10,375,731 218,361 150,130,607 3,791,387Singapore 717,120 18,887 14,759,326 95,884Others 500,748 22,289 8,125,536 37,189

11,593,599 259,537 173,015,469 3,924,460Elimination (1,555,989) — (12,060,072) (1,304,786)

Group 10,037,610 259,537 160,955,397 2,619,674

MENU



46. SIGNIFICANT EVENTS

(a) Outsourcing of IT ServicesOn 28 August 2003, the Bank entered into an estimated RM1.3 billion ten (10) year IT outsourcing agreementwith CSC Computer Science Sdn. Bhd. and CSC Computer Sciences Pte. Limited ("the CSC Group"). The servicesto be provided under the agreement include data center operations, desktop management, network managementand IT help desk across the Group's operations in Malaysia and Singapore. The Group's IT Group would continueto be responsible for IT strategy and architecture, applications development and strategic projects.

(b) Increase in Equity Interest in Mayban Life International (Labuan) Ltd.On 15 October 2003, Mayban Life Assurance Berhad (“MLAB”), a 62.0% owned subsidiary of the Bank,acquired 1,050,000 ordinary shares of USD1 each in Mayban Life International (Labuan) Ltd. (“MLI(L)”),representing the remaining 30% equity interest of its investment in MLI(L), for a cash consideration ofUSD780,000 (RM2,983,500). MLI(L) becomes a wholly-owned subsidiary of MLAB subsequent to the acquisition,and the Group's effective interest in MLI(L) increases from 43.4% to 62.0% since then.

47. SUBSEQUENT EVENTS

(a) Disposal of Equity Interest in Inter-City MPC (M) Sdn. Bhd.On 29 July 2004, Kerlipan Bersinar Sdn. Bhd., a 72.7% owned subsidiary of the Bank, disposed 7,200,000ordinary shares of RM1 each in Inter-City MPC (M) Sdn. Bhd. (ICM), representing 100% equity interest of itsinvestment in ICM, for a cash consideration of RM12,500,000.

(b) Proposed ESOS and Increase in Authorised Ordinary Share CapitalAs disclosed in Note 22, the revised Proposed ESOS (after incorporating the proposed changes) has beenapproved by the shareholders on 11 August 2004 in the Extraordinary General Meeting. In addition to theshareholders' approval obtained for the non-executive directors to participate in the revised Proposed ESOS,approval from the shareholders has also been obtained for the grant of options under the revised ProposedESOS to subscribe for a maximum of 155,000 new ordinary shares in the Bank to Tunku Alizarki bin RajaMuhammad Alias, an employee of the Bank and a person connected to a non-executive director, Raja Tan SriMuhammad Alias bin Raja Muhd. Ali.

The shareholders have also approved the resolution for the increase in the authorised ordinary share capital ofthe Bank from RM4,000,000,000 to RM10,000,000,000 by the creation of an additional 6,000,000,000 newordinary shares of RM1 each in the same meeting.

(c) Transfer of the business of Mayban Finance Berhad to the BankThe vesting order for the transfer of the finance company business of a subsidiary, Mayban Finance Berhad, tothe Bank has been issued by the High Court on 17 August 2004. The transfer will be effective on 1 October2004. The exercise has been approved by Bank Negara Malaysia vide its letter dated 4 June 2004.

(d) Acquisition of Additional Equity Interest in Aseambankers Malaysia BerhadThe Bank obtained the approval of Bank Negara Malaysia on 1 June 2004 to acquire an additional 2,350,440ordinary shares of RM1 each of Aseambankers Malaysia Berhad (“Aseambankers”) for a total consideration ofRM18,380,440. The Bank's shareholding in Aseambankers will increase from 75.0% to 79.7% when the acquisitionis completed in the future. The acquisition has not been completed as at the date of the financial statements.

MENU


48. THE OPERATIONS OF ISLAMIC BANKING SCHEME (“IBS”)

BALANCE SHEETS AS AT 30 JUNE 2004

Group Bank

Note 2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

ASSETSCash and short-term funds (a) 2,912,921 359,743 2,605,169 207,400Deposits and placements with banks

and other financial institutions (b) 89,570 166,471 64,970 134,472Investment securities (c) 3,111,229 3,201,790 2,051,061 2,128,313Loans and financing (d) 14,581,517 11,703,438 12,182,100 9,858,485Deferred tax assets (e) 203,058 108,106 148,462 76,896Other assets 25,331 38,717 4,785 10,899

20,923,626 15,578,265 17,056,547 12,416,465

LIABILITIESDeposits from customers (f) 11,738,086 11,162,258 9,957,356 8,924,332Deposits and placements of banks

and other financial institutions (g) 4,227,747 1,415,177 4,001,000 1,107,971Bills and acceptances payable 1,433,323 582,670 1,433,323 917,129Other liabilities (h) 2,081,206 1,005,428 870,100 772,448Provision for taxation and zakat (j) 143,497 102,350 95,484 69,979

19,623,859 14,267,883 16,357,263 11,791,859

Islamic banking capital fund (k) 1,299,767 1,310,382 699,284 624,606

20,923,626 15,578,265 17,056,547 12,416,465

COMMITMENTS AND CONTINGENCIES (p) 4,112,571 3,919,742 3,638,240 3,323,384


MENU



48. THE OPERATIONS OF ISLAMIC BANKING SCHEME (“IBS”) (CONT’D.)

INCOME STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004

Group Bank

Note 2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Income (l) 521,970 383,081 334,675 252,301Financing loss and provisions (m) (319,020) (203,701) (219,495) (143,343)

Net income 202,950 179,380 115,180 108,958Overhead expenses (n) (19,926) (17,066) (16,821) (14,502)

Profit before taxation and zakat 183,024 162,314 98,359 94,456Taxation (o) (42,671) (40,657) (23,434) (21,946)Zakat (869) (983) (247) (237)

Profit after taxation and zakat 139,484 120,674 74,678 72,273


MENU



STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2004

IslamicBanking Statutory Retained

Fund Reserve Profits Total

RM’000 RM’000 RM’000 RM’000

GroupAt 1 July 2002 332,500 — 506,250 838,750Net profit for the year — — 120,674 120,674Transfer to Islamic Banking Fund 350,958 — — 350,958Transfer to statutory reserves — 1,313 (1,313) —

At 30 June 2003 683,458 1,313 625,611 1,310,382Net profit for the year — — 139,484 139,484Transfer from Islamic Banking Fund (150,099) — — (150,099)Transfer to statutory reserves — 2,523 (2,523) —

At 30 June 2004 533,359 3,836 762,572 1,299,767

BankAt 1 July 2002 222,500 — 329,833 552,333Net profit for the year — — 72,273 72,273

At 30 June 2003 222,500 — 402,106 624,606Net profit for the year — — 74,678 74,678

At 30 June 2004 222,500 — 476,784 699,284


MENU




CASH FLOW STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

CASH FLOWS FROM OPERATING ACTIVITIESProfit before taxation 183,024 162,314 98,359 94,456Adjustments for:

Loan and financing loss and provision 329,355 208,217 221,849 143,469Amortisation of premiums less accretion

of discounts of investment securities (19,200) (20,569) (14,833) (16,168)Income-in-suspense 34,358 25,311 26,305 21,807Profit Equalisation Reserve 101,559 65,549 91,939 42,372

629,096 440,822 423,619 285,936Decrease in deposits and placements with

banks and other financial institutions 76,901 113,184 69,502 63,183Decrease in dealing securities — 165,678 — —Increase in loans and financing (3,241,792) (3,691,064) (2,571,769) (3,138,258)Increase in other assets 13,386 389,818 6,114 55,589Increase in deposits from customers 575,828 236,127 1,033,024 287,389Increase in deposits and placements of banks

and other financial institutions 2,812,570 100,589 2,893,029 275,366Increase in bills and acceptances payable 850,653 561,371 516,194 895,830Net (purchase)/disposal of investment securities 109,761 (354,647) 92,085 (267,405)Increase in other liabilities 974,219 883,093 5,713 683,360

Cash generated from operations 2,800,622 (1,155,029) 2,467,511 (859,010)Taxes and zakat paid (97,345) (86,670) (69,742) (42,294)

Net cash generated from/(used in)operating activities 2,703,277 (1,241,699) 2,397,769 (901,304)

MENU



CASH FLOW STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004 (CONT’D.)

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

CASH FLOWS FROM FINANCING ACTIVITYFunds transferred (from)/to Head Office (150,099) 350,958 — —

Net cash (used in)/generatedfrom financing activity (150,099) 350,958 — —

NET INCREASE/(DECREASE) IN CASHAND CASH EQUIVALENTS 2,553,178 (890,741) 2,397,769 (901,304)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 359,743 1,250,484 207,400 1,108,704

CASH AND CASH EQUIVALENTSAT END OF YEAR 2,912,921 359,743 2,605,169 207,400

Cash and cash equivalents comprise:

Cash and short term funds 2,912,921 359,743 2,605,169 207,400


MENU




(a) CASH AND SHORT-TERM FUNDS

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Cash, balances and deposits with banksand other financial institutions 2,912,921 359,743 2,605,169 207,400

(b) DEPOSITS AND PLACEMENTS WITH BANKS AND OTHER FINANCIAL INSTITUTIONS

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Licensed banks 12,600 80,000 20,000 80,000Licensed merchant banks 38,600 47,000 38,600 47,000Bank Negara Malaysia 6,370 7,471 6,370 7,472Other financial institutions 32,000 32,000 — —

89,570 166,471 64,970 134,472

(c) INVESTMENT SECURITIES

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000


Cagamas Mudharabah bonds 153,929 153,924 153,929 153,924Malaysian Government Investment

certificates and issues 413,569 254,896 329,240 203,672Khazanah bonds 148,220 232,060 24,322 142,914Islamic accepted bills 623,678 1,350,601 623,678 1,350,601Negotiable Islamic certificates of deposits 954,151 267,721 896,979 238,154

Total money market instruments 2,293,547 2,259,202 2,028,148 2,089,265

MENU



(c) INVESTMENT SECURITIES (CONT’D.)

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Unquoted securities in Malaysia:

Private and Islamic debt securities 819,526 922,810 14,350 14,350

Accumulated accretion of discountsless amortisation of premiums 14,156 40,778 8,563 24,698

Provision for diminution in valueof Islamic debt securities (16,000) (21,000) — —

3,111,229 3,201,790 2,051,061 2,128,313

Indicative value of unquoted securities:

CagamasMudharabah bonds 155,247 152,515 155,247 152,515

Malaysian GovernmentInvestment certificates and issues 419,963 261,986 335,034 208,493

Khazanah bonds 151,329 266,667 26,161 166,429Private and Islamic debt securities 827,716 954,384 14,350 14,350

The maturity structure of money market instruments held for investment is as follows:

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Maturing within one year 1,451,071 1,916,460 1,421,942 1,752,786One year to three years 700,070 303,073 509,791 298,435Three years to five years 142,406 38,044 96,415 38,044After five years — 1,625 — —

2,293,547 2,259,202 2,028,148 2,089,265

MENU




(d) LOANS AND FINANCING

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Overdrafts 1,191,398 1,129,008 1,191,398 1,129,008Term financing 18,328,632 16,758,987 16,999,470 15,212,029Trust receipts 199,081 237,564 152,292 177,939Hire purchase receivables 2,316,239 1,597,262 — —Other financing 2,706,854 1,308,529 2,521,772 1,368,154

24,742,204 21,031,350 20,864,932 17,887,130Unearned income (9,321,733) (8,785,431) (8,102,952) (7,665,143)

Gross loans and financing 15,420,471 12,245,919 12,761,980 10,221,987Provision for bad and doubtful debts

and financing– Specific (217,866) (172,214) (121,607) (88,756)– General (534,031) (306,364) (395,910) (232,255)Income-in-suspense (87,057) (63,903) (62,363) (42,491)

Net loans and financing 14,581,517 11,703,438 12,182,100 9,858,485

(i) Loans and financing analysed by concepts are as follows:

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Al-Bai’ Bithaman Ajil 10,578,104 9,119,157 10,096,940 8,677,984Al-Ijarah 1,833,046 1,226,985 — —Al-Murabahah 2,659,227 1,536,956 2,659,227 1,536,956Other principles 350,094 362,821 5,813 7,047

15,420,471 12,245,919 12,761,980 10,221,987

MENU



(d) LOANS AND FINANCING (CONT’D.)(ii) Loans and financing analysed by their economic purposes are as follows:

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Agriculture 262,910 412,194 261,120 410,110Manufacturing 2,047,128 1,127,722 2,038,438 1,119,324Electricity, gas and water 251,745 70,222 251,226 70,114Construction 583,072 507,937 505,544 441,529Real estate 133,874 222,849 131,726 221,152Purchase of landed properties:

– Residential 7,082,372 6,337,377 6,597,801 5,895,536– Non-residential 709,076 408,533 600,989 285,446– Less Islamic loans sold to Cagamas (114,380) (127,268) (114,380) (127,268)

General commerce 563,980 345,696 555,101 333,736Transport, storage and communication 227,599 193,655 218,380 183,887Finance, insurance and business service 1,120,366 814,598 1,115,250 812,601Purchase of securities 110,545 155,550 70,911 107,295Purchase of transport vehicles 2,110,705 1,593,029 133 141

– Less Islamic loans sold to Cagamas (351,994) (425,341) — —Consumption credit 500,769 458,696 353,643 320,116Others 182,704 150,470 176,098 148,268

15,420,471 12,245,919 12,761,980 10,221,987

(iii) The maturity structure of loans and financing is as follows:

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Maturing within one year 4,025,505 2,794,421 3,985,115 2,783,567One year to three years 424,220 317,653 240,526 117,572Three years to five years 812,104 1,228,419 248,629 403,394After five years 10,158,642 7,905,426 8,287,710 6,917,454

15,420,471 12,245,919 12,761,980 10,221,987

MENU




(d) LOANS AND FINANCING (CONT’D.)(iv) Movements in the non-performing loans and financing (including income receivables) are as follows:

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Gross balance at beginning of year 883,462 601,101 697,685 428,292Classified during the year 1,079,420 836,679 923,746 674,933Recovered/regularised during the year (768,563) (525,938) (684,291) (408,005)Expenses debited to

customers’ accounts 2,571 3,750 2,571 3,750Amount written off (53,572) (32,130) (21,070) (1,285)

Gross balance at end of year 1,143,318 883,462 918,641 697,685Less:– Specific provision (217,866) (172,214) (121,607) (88,756)– Income-in-suspense (87,057) (63,903) (62,363) (42,491)

Net non-performing loans 838,395 647,345 734,671 566,438

Gross loans and financing 15,420,471 12,245,919 12,761,980 10,221,987Add: Loans sold to Cagamas 466,374 552,609 114,380 127,268

15,886,845 12,798,528 12,876,360 10,349,255Less:– Specific provision (217,866) (172,214) (121,607) (88,756)– Income-in-suspense (87,057) (63,903) (62,363) (42,491)

Net loan and financing(including loans sold to Cagamas) 15,581,922 12,562,411 12,692,390 10,218,008

Ratio of net non-performing loans 5.38% 5.15% 5.79% 5.54%

MENU



(d) LOANS AND FINANCING (CONT’D.)(v) Movements in the provision for bad and doubtful debts and income-in-suspense are as follows:

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Specific provisionBalance at beginning of year 172,214 164,653 88,756 79,136Provision made during the year 268,756 214,177 82,842 33,912Amount written back in respect

of recoveries (165,877) (178,706) (22,580) (17,905)Amount written off (49,677) (22,761) (19,861) (1,238)Transfer to general provision (2,084) — (2,084) —Transfer to specific provision for

restructured/rescheduledloans and financing (5,466) (5,149) (5,466) (5,149)

Balance at end of year 217,866 172,214 121,607 88,756

General provisionBalance at beginning of year 306,364 133,793 232,255 104,793Provision made during the year 225,583 172,571 161,571 127,462Transfer from specific provision 2,084 — 2,084 —


As a percentage of total loans(including Islamic loans sold to

Cagamas less specific provisionand income-in-suspense) 3.43% 2.44% 3.12% 2.27%

As a percentage of total risk-weightedassets, excluding deferred tax assets 3.90% 2.77% 3.86% 2.87%

MENU




(d) LOANS AND FINANCING (CONT’D.)(v) Movements in the provision for bad and doubtful debts and income-in-suspense are as follows (Cont’d.):

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Income-in-suspenseBalance at beginning of year 63,903 47,786 42,491 20,731Provision made during the year 93,690 72,645 70,076 42,676Amount written back in

respect of recoveries (59,332) (47,334) (43,771) (20,869)Transfer to income-in-suspense for

restructured/rescheduledloans and financing (8,187) — (5,224) —

Amount written off (3,017) (9,194) (1,209) (47)


(e) DEFERRED TAX ASSETS

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

At 1 July 2003/2002 (108,106) (47,612) (76,896) (29,342)Recognised in the income statement

(Note 48 (o)) (92,486) (60,494) (71,566) (47,554)Transfer to provision for taxation (2,466) — — —

At 30 June 2004/2003 (203,058) (108,106) (148,462) (76,896)

Presented after appropriate offsettingas follows:

Deferred tax assets, net (203,058) (110,572) (148,462) (76,896)Deferred tax liabilities, net — 2,466 — —

MENU



(e) DEFERRED TAX ASSETS (CONT’D.)Deferred tax assets and liabilities are offset when there is a legally enforceable right to set-off current tax assetsagainst current tax liabilities and when the deferred income taxes relate to the same fiscal authority. The netdeferred tax assets shown in the balance sheet have been determined after appropriate offsetting.

The components and movements of deferred tax assets and liabilities during the financial year prior to offsettingare as follows:

Deferred Tax Assets of the Group:


Value ofLoan Loss Investments

and Provisions and Provision Otherand Income Amortisation for TemporarySuspended of Premiums Liabilities Differences Total

RM’000 RM’000 RM’000 RM’000 RM’000

At 1 July 2003 (88,127) (5,880) (4,700) (11,865) (110,572)Recognised in the

income statement (63,538) 1,400 (54) (30,294) (92,486)

At 30 June 2004 (151,665) (4,480) (4,754) (42,159) (203,058)

At 1 July 2002 (40,977) (5,880) (2,201) — (49,058)Recognised in the

income statement (47,150) — (2,499) (11,865) (61,514)

At 30 June 2003 (88,127) (5,880) (4,700) (11,865) (110,572)

MENU




(e) DEFERRED TAX ASSETS (CONT’D.)

Deferred Tax Liabilities of the Group:

Accretion ofDiscounts onInvestments

RM’000

At 1 July 2003 2,466Transfer to provision for taxation (2,466)

At 30 June 2004 —

At 1 July 2002 1,446Recognised in the income statement 1,020

At 30 June 2003 2,466

Deferred Tax Assets of the Bank:

Loan Loss Otherand Temporary

Provisions Differences Total

RM’000 RM’000 RM’000

At 1 July 2003 (65,031) (11,865) (76,896)Recognised in the income statement (45,823) (25,743) (71,566)

At 30 June 2004 (110,854) (37,608) (148,462)

At 1 July 2002 (29,342) — (29,342)Recognised in the income statement (35,689) (11,865) (47,554)

At 30 June 2003 (65,031) (11,865) (76,896)

MENU



(f) DEPOSITS FROM CUSTOMERS

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Mudharabah Fund

Demand deposits 3,244 251 — —Savings deposits 127,798 115,074 — —General investment deposits 5,218,542 6,844,963 3,568,854 4,722,362Special investment deposits 481,383 142,898 481,383 142,898

5,830,967 7,103,186 4,050,237 4,865,260

Non-Mudharabah Fund

Demand deposits 3,063,365 2,308,080 3,063,365 2,308,080Savings deposits 1,828,129 1,387,105 1,828,129 1,387,105Negotiable instruments of deposits 1,015,625 363,887 1,015,625 363,887

5,907,119 4,059,072 5,907,119 4,059,072

11,738,086 11,162,258 9,957,356 8,924,332

(i) The maturity structure of general and special investment deposits and negotiable instruments of depositsis as follows:

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Due within six months 5,355,435 6,119,207 3,849,652 4,154,058Six months to one year 1,220,833 1,194,375 1,084,734 1,048,329One year to three years 25,983 32,710 19,570 24,112Three years to five years 113,299 5,456 111,906 2,648

6,715,550 7,351,748 5,065,862 5,229,147

MENU




(f) DEPOSITS FROM CUSTOMERS (CONT’D.)

(ii) The deposits are sourced from the following customers:

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Business enterprises 3,338,568 3,972,555 3,045,178 3,114,140Individuals 2,726,426 2,815,688 2,515,584 2,213,113Others 5,673,092 4,374,015 4,396,594 3,597,079

11,738,086 11,162,258 9,957,356 8,924,332

(g) DEPOSITS AND PLACEMENTS OF BANKS AND OTHER FINANCIAL INSTITUTIONS

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Mudharabah Fund

Licensed banks 1,600,580 242,228 1,601,810 299,000Licensed finance companies 123,910 67,250 123,910 67,250Licensed discount houses 510,151 108,820 479,250 108,820Licensed merchant banks 75,630 700 74,590 —Other financial institutions 200,451 375,565 4,415 89,787

2,510,722 794,563 2,283,975 564,857

Non-Mudharabah Fund

Licensed banks 1,385,304 488,586 1,385,304 446,086Licensed finance companies 59,710 60,000 59,710 45,000Licensed discount houses 219,655 — 219,655 —Licensed merchant banks — 20,000 — —Other financial institutions 52,356 52,028 52,356 52,028

1,717,025 620,614 1,717,025 543,114

4,227,747 1,415,177 4,001,000 1,107,971

MENU



(h) OTHER LIABILITIES

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Profit payable 36,613 38,181 29,565 28,688Profit equalisation reserve (Note 48(i)) 167,108 65,549 134,311 42,372Due to Head Office 1,838,091 883,848 668,067 684,248Other creditors, provisions and accruals 39,394 17,850 38,157 17,140

2,081,206 1,005,428 870,100 772,448

(i) PROFIT EQUALISATION RESERVES

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

The movements in PER are as follows:-

At 1 July 2003/2002 65,549 — 42,372 —Amount arising during the year 124,197 74,578 91,939 42,372Amount written back (22,638) (9,029) — —

At 30 June 2004/2003 167,108 65,549 134,311 42,372

(j) PROVISION FOR TAXATION AND ZAKAT

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Taxation 137,623 97,018 95,000 69,500Zakat 5,874 5,332 484 479

143,497 102,350 95,484 69,979

MENU




(k) ISLAMIC BANKING CAPITAL FUND

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Funds allocated from Head Office 533,359 683,458 222,500 222,500Statutory reserves 3,836 1,313 — —Retained profits 762,572 625,611 476,784 402,106

1,299,767 1,310,382 699,284 624,606

(l) INCOME FROM THE OPERATIONS OF IBS

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Income derived from investmentof depositors’ funds 974,716 760,364 688,299 511,747

Income attributable to depositors:– Other customers

Mudharabah Fund (215,285) (235,110) (111,562) (152,506)Non-Mudharabah Fund (78,886) (41,041) (78,886) (41,042)

(294,171) (276,151) (190,448) (193,548)– Banks and other financial institutions

Mudharabah Fund (29,511) (36,936) (29,392) (22,656)Non-Mudharabah Fund (58,008) (23,126) (67,919) (23,127)

(87,519) (60,062) (97,311) (45,783)Profit equalisation reserves (101,559) (65,549) (91,939) (42,372)

Income attributable to the Group/Bank 491,467 358,602 308,601 230,044– Other IBS income 46,047 36,806 41,616 34,584– Other IBS expenses (15,544) (12,327) (15,542) (12,327)

521,970 383,081 334,675 252,301

MENU



(l) INCOME FROM THE OPERATIONS OF IBS (CONT’D.)

Details of the income derived from investment of depositors’ funds and funds allocated from Head Office areas follows:

Group Bank

Depositors’ Depositors’funds IBF funds IBF

RM’000 RM’000 RM’000 RM’000

2004Income from financing 882,173 — 624,071 —Investment income:

– Gain/(loss) from sale of dealing securities (1,052) — (1,052) —– Gain/(loss) from sale of

investment securities 5,376 — — —– Gross income from investment securities 79,327 — 64,953 —

965,824 — 687,972 —Fee income:

– Commission — 32,514 — 32,514– Service charges and fees 662 9,101 219 9,101– Other fee income 107 532 108 1– Other non-operating income 8,123 3,900 — —

974,716 46,047 688,299 41,616

2003Income from financing 682,268 — 456,624 —Investment income:

– Gain/(loss) from sale of dealing securities 2,718 — (1,754) —– Gain/(loss) from sale of

investment securities 6,307 — — —– Gross income from investment securities 61,939 — 56,162 —

753,232 — 511,032 —Fee income:

– Commission — 28,850 — 26,628– Service charges and fees 1,296 7,956 682 7,956– Other fee income 33 — 33 —– Other non-operating income 5,803 — — —

760,364 36,806 511,747 34,584

MENU




(m) FINANCING LOSS AND PROVISIONS

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Provision for bad and doubtful debtsand financing:– Specific (net) 102,879 35,471 60,262 16,007– General 225,583 172,571 161,571 127,462

Bad debts and financing:– Written off 893 175 16 —– Recovered (10,335) (4,516) (2,354) (126)

319,020 203,701 219,495 143,343

(n) OVERHEAD EXPENSES

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Personnel expenses* 9,009 7,945 8,067 7,092Establishment costs 3,579 3,233 3,348 3,038Marketing costs 1,502 923 999 755Administration and general expenses 5,836 4,965 4,407 3,617

19,926 17,066 16,821 14,502

Included in overhead expenses are:

Shariah CommitteeMembers’ fee and remuneration 52 45 52 45

* Personnel expenses

Salaries and wages 7,213 6,481 6,471 5,789Social security cost 56 53 51 49Pension cost – defined contribution plan 1,120 953 981 845Other staff related expenses 620 458 564 409

9,009 7,945 8,067 7,092

MENU



(o) TAXATION

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Current year’s provision 135,157 101,151 95,000 69,500Deferred tax in relation to origination

and reversal of temporary differences(Note 48(e)) (92,486) (60,494) (71,566) (47,554)

42,671 40,657 23,434 21,946

(p) COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Bank and its subsidiaries make various commitments and incur certaincontingent liabilities with legal recourse to their customers. No material losses are anticipated as a result ofthese transactions.

Risk-weighted exposure of the Bank and its subsidiaries as at 30 June, are as follows:

2004 2003


GroupDirect credit substitutes 192,026 192,026 130,187 130,187Certain transaction-related contingent items 530,932 265,466 402,147 201,174Short-term self-liquidating trade

related contingencies 218,530 43,706 157,304 31,461Islamic housing and hire purchase loans

sold to Cagamas Berhad 466,374 466,374 552,609 552,609Irrevocable commitments to extend credit:

– Maturity within one year 1,668,197 — 1,764,007 —– Maturity exceeding one year 425,988 212,994 737,578 368,789

Miscellaneous 610,524 — 175,910 —

4,112,571 1,180,566 3,919,742 1,284,220

MENU




(p) COMMITMENTS AND CONTINGENCIES (CONT’D.)

2004 2003


BankDirect credit substitutes 192,026 192,026 130,187 130,187Certain transaction-related contingent items 530,932 265,466 402,147 201,074Short-term self-liquidating trade

related contingencies 218,529 43,706 157,304 31,461Islamic housing loans sold to

Cagamas Berhad 114,380 114,380 127,268 127,268Irrevocable commitments to extend credit:

– Maturity within one year 1,668,197 — 1,763,528 —– Maturity exceeding one year 303,652 151,826 567,040 283,520

Miscellaneous 610,524 — 175,910 —

3,638,240 767,404 3,323,384 773,510

(q) CAPITAL ADEQUACY

The capital adequacy ratios of the Group and the Bank as at 30 June, are as follows:

Group Bank

2004 2003 2004 2003

Capital ratioCore capital ratio 8.01% 10.86% 5.37% 6.76%Risk-weighted capital ratio 11.91% 13.63% 9.23% 9.63%

MENU



(q) CAPITAL ADEQUACY (CONT’D.)

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

Tier 1 capitalIslamic banking fund 533,359 683,458 222,500 222,500Statutory reserves 3,836 1,313 — —Retained profits 762,572 625,611 476,784 402,106Less: Deferred tax assets (203,058) (108,106) (148,462) (76,896)

Total Tier 1 capital 1,096,709 1,202,276 550,822 547,710

Tier 2 capitalGeneral provision for bad and

doubtful debts and financing 534,031 306,364 395,910 232,255

Total Tier 2 capital 534,031 306,364 395,910 232,255

Capital base 1,630,740 1,508,640 946,732 779,965

The breakdown of risk-weighted assets (excluding deferred tax assets) in the various categories of risk-weightsare as follows:

Group Bank

2004 2003 2004 2003RM’000 RM’000 RM’000 RM’000

0% 2,874,992 710,221 2,735,364 558,67310% 153,929 153,924 153,929 153,92420% 2,714,978 2,428,105 2,068,832 1,987,76650% 7,115,876 6,401,312 6,584,418 5,912,745100% 9,573,307 7,366,536 6,528,856 4,732,030

22,433,082 17,060,098 18,071,399 13,345,138

MENU




(r) FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES

The estimated fair values of those on-balance sheet financial assets and financial liabilities as at the balancesheet date approximate their carrying amounts as shown in the balance sheets, except for the followingfinancial assets and liabilities:

2004 2003


RM’000 RM’000 RM’000 RM’000

GroupFinancial assets

Investment securities 3,111,229 3,132,084 3,201,790 3,253,228Loans and financing* 15,115,548 15,378,915 12,009,802 12,610,566

Financial liabilitiesDeposits from customers 11,738,086 11,741,468 11,162,258 11,162,258

BankFinancial assets

Investment securities 2,051,061 2,051,449 2,128,313 2,130,541Loans and financing* 12,578,010 12,814,780 10,090,740 10,398,825

Financial liabilitiesDeposits from customers 9,957,356 9,959,590 8,924,332 8,924,332

* The general provisions for the Group and the Bank amounting to RM534,031,000 (2003: RM306,364,000)and RM395,910,000 (2003: RM232,255,000) respectively have been added back to arrive at the carryingvalue of the loans, advances and financing.

The methods and assumptions used to estimate the fair values of the financial assets and financial liabilities ofIBS operations are as stated in Note 42.

MENU



(s) COMPARATIVES

The presentation of the financial statements of the IBS operations for the current year has been changed toadopt the format as prescribed by Malaysian Accounting Standards Board Standard i-1: Presentation of FinancialStatements of Islamic Financial Institutions. Comparative figures have been reclassified to conform with thispresentation, where necessary.

(t) SHARIAH COMMITTEE

The operation of IBS is governed by Section 124(3) of the Banking and Financial Institutions Act 1996 (“theAct”), which stipulates that “any license institution carrying on Islamic Financial business, in addition to itsexisting licensed business may, from time to time seek the advise of the Shariah Advisory Council establishedunder subsection (7) of the Act, on the operations of its business in order to ensure that it does not involveany element which is not approved by the Religion of Islam” and Bank Negara Malaysia’s guideline on “SkimPerbankan Tanpa Faedah” for the Commercial Banks under Part III Section B (11) which states that “The bankshall be required to appoint one or more Shariah consultants to advise the Islamic Banking Institutions onmatters pertaining to Shariah”.

Based on the above, the duties and responsibilities of the Group’s Shariah Consultants are to advise on the overallIslamic Banking operations of the Group's business in order to ensure compliance with the Shariah requirements.

The roles of Shariah Consultants in monitoring the Group’s activities include:

(a) Review the products and services to ensure conformity with the Shariah requirements.

(b) Deliberate on Shariah issues pertaining to the day-to-day operations and provide advise accordinglythrough regular meetings.

(c) Provide endorsement to investment banking proposals including structuring of facilities capital marketinstruments, takaful, and etc.

(d) Participate in the in-house training programmes of the Group.

The Group presently has three Shariah Consultants. For the Group’s takaful business, Mayban Takaful Berhadis advised by a five-member Shariah Supervisory Council.

MENU




(u) ALLOCATION OF INCOME

The policy of allocation of income to the various types of deposits and investments is subject to “TheFramework on Rate of Return” issued by Bank Negara Malaysia on October 2001. The objective is to set theminimum standard and terms of reference for the Islamic banking institutions in calculating and deriving therate of return for the depositors.

49. LIFE, GENERAL TAKAFUL AND FAMILY TAKAFUL FUNDS’ BALANCE SHEET

AS AT 30 JUNE 2004

Group

2004 2003RM’000 RM’000

ASSETSProperty, plant and equipment 11,090 14,079Investments 1,532,569 1,257,215Loans 46,117 34,873Receivables 32,748 23,088Cash and bank balances 4,044 7,361Investment-linked business assets 993,892 427,163

Total life, general takaful and family takaful business liabilities 2,620,460 1,763,779

LIABILITIESOther liabilities 88,106 103,032Investment-linked business liabilities 13,385 4,411

Total life, general takaful and family takaful business liabilities 101,491 107,443

Life, general takaful and family takaful policyholders’ funds 2,518,969 1,656,336

2,620,460 1,763,779

(i) The operating revenue generated from the life insurance, general takaful and family takaful businesses of theGroup for the financial year amounted to approximately RM1,129,906,000 (2003: RM609,372,000).

MENU


49. LIFE, GENERAL TAKAFUL AND FAMILY TAKAFUL FUNDS’ BALANCE SHEET

AS AT 30 JUNE 2004 (CONT’D.)

(ii) The estimated fair values of financial assets and financial liabilities of the life, general takaful and family takafulfunds as at the balance sheet date approximate their carrying amounts as shown in the balance sheets, exceptfor the following financial assets and liabilities:

2004 2003


RM’000 RM’000 RM’000 RM’000

GroupInvestments 1,532,569 1,532,388 1,257,215 1,305,407Loans 46,117 46,117 34,873 34,941

The methods and assumptions used to estimate the fair values of the financial assets and financial liabilities ofthe life and family takaful funds are as stated in Note 42.

50. COMPARATIVES

The presentation and classification of items in the current year financial statements have been consistent with theprevious financial year except that certain comparatives amounts relating to cheque clearing receivables have beenadjusted to conform with current year's presentation.

AsPreviously

Stated Adjustments As Restated

RM’000 RM’000 RM’000

GroupCash and short-term funds 16,122,434 517,195 16,639,629Other assets 2,565,786 (517,195) 2,048,591

Risk-weighted assets– 20% 19,454,971 517,195 19,972,166– 100% 103,670,749 (517,195) 103,153,554

MENU



50. COMPARATIVES

AsPreviously

Stated Adjustments As Restated

RM’000 RM’000 RM’000

Group (Cont’d.)Without deducting proposed dividend*:

– Core capital ratio 10.61% 0.04% 10.65%– Risk-weighted capital ratio 15.62% 0.06% 15.68%

After deducting proposed dividend:– Core capital ratio 10.24% 0.04% 10.28%– Risk-weighted capital ratio 15.25% 0.05% 15.30%

BankCash and short-term funds 13,218,144 472,462 13,690,606Other assets 1,212,873 (472,462) 740,411

Risk-weighted assets– 20% 18,228,121 472,462 18,700,583– 100% 78,980,566 (472,462) 78,508,104

Without deducting proposed dividend*:– Core capital ratio 11.40% 0.05% 11.45%– Risk-weighted capital ratio 14.88% 0.06% 14.94%

After deducting proposed dividend:– Core capital ratio 10.92% 0.04% 10.96%– Risk-weighted capital ratio 14.40% 0.06% 14.46%

* In arriving at the capital base used in the ratio calculations of the Group and the Bank, the proposed dividendsfor respective financial years were not deducted.

51. CURRENCY

All amounts are in Ringgit Malaysia unless otherwise stated.

MENU

309

CorporateStructure

Retail Financial Services Group

Enterprise Financial Services Group

Investment Banking Group

Cards Business Group

Automobile Finance Group

International Business Group

Risk Management

Central Operations

Group Services

MENU

Chief Audit Executive

Retail Financial Services

Risk Management

Human Resource

Company Secretary

President and CEO

• Chief Credit Officer

• Central Operations

• Property, Security and Purchasing

• Accounting Services & Treasury Back Office

• Corporate Services

• Corporate Remedial Management

• International Business

• Information System

• Financial and Business Analysis

• Legal Services

• Enterprise Financial Services

• Cards Business

• Automobile Financing

• Islamic Banking

• Custodial Services

• Investment Banking

• Insurance

• Fund Management

• Treasury & Dealing

• Trustee Services

Board of Directors

• Corporate Planning

• Service Level Management

• Public Affairs and Brand Management• Total Quality Management

Deputy President

Deputy President

Chairmanof the Board

311

Mayb

ank 2004 A

nn

ual R

epo

rtOrganisation

Structure


MAYBANK ORGANISATIONSTRUCTURE

MENU

313

Mayb

ank 2004 A

nn

ual R

epo

rtMaybank

Group Global Network


MAYBANK

MAYBANK GROUPNETWORK

Mayban Investment ManagementSdn Bhd1 branch

Mayban Life Assurance Bhd1 branch

Maybank Philippines Inc45 branches

Maybank (PNG) Ltd(Papua New Guinea)2 branches

Mayban Securities Sdn Bhd2 branches

Mayban Takaful Bhd1 branch

Mayban Trustees Bhd1 branch

Mayban Unit Trust Bhd1 branch

Mayban Ventures Sdn Bhd1 branch

P.T. Bank Maybank Indocorp(Indonesia)1 branch

Aseambankers Malaysia Bhd1 branch

Mayban General Assurance Bhd3 branches

Mayban Discount Bhd1 branch

Mayban Finance Bhd79 branches

Mayban International Trust (Labuan) Bhd1 branch

Maybank International (L) Ltd1 branch

Malaysia336 branches

Singapore22 branches

Brunei Darussalam3 branches

People’s Republic of China1 branch and1 representative office

Hong Kong SAR1 branch

Vietnam1 branch and1 representative office

United Kingdom1 branch

United States of America1 branch

Cambodia1 branch

Bahrain1 branch

MENU

GroupDirectory


Commercial Banking

Maybank14th Floor, Menara Maybank100, Jalan Tun Perak50050 Kuala Lumpur

P.T. Bank Maybank IndocorpBCD Tower Lt. 17Jalan Jend. Sudirman Kav. 26Jakarta 12920, Indonesia

Maybank Philippines IncorporatedLegaspi Towers 300Roxas BoulevardManila, Philippines

Maybank (PNG) LtdCorner Waigani Road/Islander DriveP.O. Box 882 WaiganiNational Capital DistrictPapua New Guinea

Maybank International (L) LtdLevel 16 (B), Main Office TowerFinancial Park LabuanJalan Merdeka, 87000Wilayah Persekutuan Labuan

Investment Banking

Aseambankers Malaysia Berhad33rd Floor, Menara Maybank100, Jalan Tun Perak50050 Kuala Lumpur

Mayban Ventures Sdn Bhd26th Floor, Menara Maybank100, Jalan Tun Perak50050 Kuala Lumpur

Mayban Venture Capital CompanySdn Bhd26th Floor, Menara Maybank100, Jalan Tun Perak50050 Kuala Lumpur

Mayban Discount Bhd31st Floor, Menara Maybank100, Jalan Tun Perak50050 Kuala Lumpur

Mayban-JAIC Capital ManagementSdn Bhd26th Floor, Menara Maybank100, Jalan Tun Perak50050 Kuala Lumpur

Mayban Unit Trust BerhadLevel 12, MaybanLife TowerDataran MaybankNo. 1, Jalan Maarof59000 Kuala Lumpur

Mayban Investment ManagementSdn BhdLevel 13, MaybanLife TowerDataran MaybankNo. 1, Jalan Maarof59000 Kuala Lumpur

Finance

Mayban Finance Bhd17th Floor, Dataran MaybankNo. 1, Jalan Maarof59000 Kuala Lumpur

Aseamlease Bhd17th Floor, Dataran MaybankNo. 1, Jalan Maarof59000 Kuala Lumpur

Aseam Credit Sdn Bhd17th Floor, Dataran MaybankNo. 1, Jalan Maarof59000 Kuala Lumpur

MENU

315

Mayb

ank 2004 A

nn

ual R

epo

rt

Insurance

Mayban Fortis Holdings BerhadLevel 15, MaybanLife TowerDataran MaybankNo. 1, Jalan Maarof59000 Kuala Lumpur

Mayban General AssuranceBerhadLevel 15, MaybanLife TowerDataran MaybankNo. 1, Jalan Maarof59000 Kuala Lumpur

Mayban Life Assurance BhdLevel 15, MaybanLife TowerDataran MaybankNo. 1, Jalan Maarof59000 Kuala Lumpur

Mayban Life International(Labuan) LtdLevel 16 (B), Main Office TowerFinancial Park Labuan Jalan Merdeka, 87000Wilayah Persekutuan Labuan

Mayban Takaful BhdLevel 15, MaybanLife TowerDataran MaybankNo. 1, Jalan Maarof59000 Kuala Lumpur

Stockbroking

Mayban Securities Sdn BhdLevel 8, MaybanLife TowerDataran MaybankNo. 1, Jalan Maarof59000 Kuala Lumpur

Trustee Services

Mayban Trustees Bhd34th Floor, Menara Maybank100, Jalan Tun Perak50050 Kuala Lumpur

MENU

Analysisof Shareholdings as at 18 August 2004


Authorised Share Capital : 10,000,000,000Paid-Up Share Capital : 3,600,171,921Class of Shares : Ordinary Share of RM1 eachVoting Right : 1 vote per Ordinary Share

No. of % of No. of % of IssuedSize of Shareholdings Shareholders Shareholders Shares Held Capital

Less than 100 380 1.09 9,585 0.00100 to 1,000 shares 11,718 33.52 7,955,804 0.221,001 to 10,000 shares 17,492 50.03 65,419,498 1.8210,001 to 100,000 shares 4,438 12.69 120,855,017 3.35100,001 to less than 5% of issued shares 929 2.66 1,294,893,106 35.975% and above of issued shares 3 0.01 2,111,038,911 58.64

TOTAL 34,960 100.00 3,600,171,921 100.00

SUBSTANTIAL SHAREHOLDERS

No. Name of Shareholders No. of Shares Held % of Shares

1. Amanah Raya Nominees Tempatan Sdn Bhd 1,245,688,475 34.60(Skim Amanah Saham Bumiputera)

2. Permodalan Nasional Berhad 529,435,487 14.713. Employees Provident Fund Board 335,914,949 9.33

TOP THIRTY SHAREHOLDERS


1. Amanah Raya Nominees Tempatan Sdn Bhd 1,245,688,475 34.60(Skim Amanah Saham Bumiputera)

2. Permodalan Nasional Berhad 529,435,487 14.713. Employees Provident Fund Board 335,914,949 9.334. Cimsec Nominees Tempatan Sdn Bhd 124,000,000 3.44

(Security Trustee KCW Issue 1)5. Lembaga Kemajuan Tanah Persekutuan (Felda) 100,077,725 2.786. Valuecap Sdn Bhd 72,028,900 2.007. Cimsec Nominees Tempatan Sdn Bhd 48,500,000 1.35

(Security Trustee KCW Issue 2)

MENU

317

Mayb

ank 2004 A

nn

ual R

epo

rt

TOP THIRTY SHAREHOLDERS


8. HSBC Nominees Asing Sdn Bhd 46,998,250 1.31(Emerging Markets Growth Fund)

9. Cartaban Nominees Asing Sdn Bhd 40,100,000 1.11(SSBT Fund GB01 for Harbor International Fund)

10. Malaysia Nominees Tempatan Sdn Bhd 30,798,012 0.86(Great Eastern Life Assurance Malaysia Berhad Par 1)

11. Amanah Raya Nominees Tempatan Sdn Bhd 29,637,300 0.82(Amanah Saham Malaysia)

12. Amanah Raya Nominees Tempatan Sdn Bhd 25,372,000 0.70(Amanah Saham Wawasan 2020)

13. HSBC Nominees Asing Sdn Bhd 15,059,300 0.42(Capital International Emerging Markets Investment Fund)

14. HSBC Nominees Asing Sdn Bhd 13,540,515 0.37(Abu Dhabi Investment Authority)

15. HSBC Nominees Asing Sdn Bhd 13,150,300 0.36(JPMCB For Europacific Growth Fund)

16. Kumpulan Wang Amanah Pencen 11,801,800 0.3317. Yong Siew Yoon 11,374,998 0.3218. Pertubuhan Keselamatan Sosial 11,093,750 0.3119. Amanah Raya Nominees Tempatan Sdn Bhd 10,487,500 0.29

(Sekim Amanah Saham Nasional)20. Cartaban Nominees Asing Sdn Bhd 10,203,200 0.28

(Government of Singapore Investment Corporation Pte Ltdfor Government of Singapore C)

21. Kumpulan Wang Amanah Pencen 9,566,300 0.2722. Cartaban Nominees Asing Sdn Bhd 9,500,000 0.26

(SSBT Fund HG09 for International Fund AM Fund Ins SR)23. HDM Nominees Asing Sdn Bhd 9,381,900 0.26

(Lim & Tan Securities Pte Ltd for Topview Holdings Ltd)24. Cartaban Nominees Asing Sdn Bhd 9,353,000 0.26

(Investors Bank And Trust Co. for Ishares, Inc)25. Kumpulan Wang Amanah Pencen 9,221,800 0.2626. Citicorp Nominees Tempatan Sdn Bhd 8,735,300 0.24

(ING Insurance Berhad Inv-IL Par)27. Kumpulan Wang Amanah Pencen 8,200,000 0.2328. HSBC Nominees Asing Sdn Bhd 7,950,000 0.22

(Universities Superannuation Scheme Ltd)29. Tasec Nominees Asing Sdn Bhd 7,244,900 0.20

(TA Securities HK Ltd for Jeffrey Smith)30. Kumpulan Wang Amanah Pencen 6,742,800 0.19

TOTAL 2,811,158,461 78.08

MENU

Classificationof Shareholders as at 18 August 2004


No. of Shareholders No. of Shareholdings % of Total ShareholdingsCategory Malaysian Foreign Malaysian Foreign Malaysian Foreign

INDIVIDUAL

a. Bumiputera 3,486 13,160,310 0.37b. Chinese 20,024 106,493,254 2.96c. Indian 1,068 4,059,857 0.11d. Others 188 1,511 758,534 19,400,289 0.02 0.54

BODY CORPORATE

a. Banks/Finance 43 1 951,206,661 7,000 26.42b. Investment/Trust 54 31,372,051 0.87c. Societies 17 1,262,275 0.04d. Industrial 491 53 42,944,315 5,031,431 1.19 0.14

GOVERNMENT AGENCIES/INSTITUTION 23 159,208,385 4.42

NOMINEES 2,753 5,248 1,673,742,549 591,525,010 46.49 16.43

TOTAL 28,147 6,813 2,984,208,191 615,963,730 82.89 17.11

MENU

319

Changesin Share Capital

Authorised Share Capital

The present authorised share capital of the Bank is RM10,000,000,000 divided into 10,000,000,000 ordinary shares of RM1.00each. Details of changes in its authorised share capital since its incorporation are as follows:-

Increase in Authorised Total AuthorisedDate Share Capital Share Capital

31-05-1960 20,000,000 20,000,000

06-09-1962 30,000,000 50,000,000

09-04-1977 150,000,000 200,000,000

17-01-1981 300,000,000 500,000,000

06-10-1990 500,000,000 1,000,000,000

09-10-1993 1,000,000,000 2,000,000,000

19-06-1998 2,000,000,000 4,000,000,000

11-08-2004 4,000,000,000 10,000,000,000

Issued and Paid-Up Share Capital

Details of changes in the Bank’s issued and paid-up share capital since its incorporation are as follows:-

Date of No. of Ordinary Par Resultant Total IssuedAllotment Shares Allotted Value Consideration and Paid-Up Capital

RM RM’000

31-05-1960 1,500,000 5.00 Cash 7,500,000

18-05-1961 500,000 5.00 Cash 10,000,000

31-05-1962 1,000,000 5.00 Rights Issue (1:2) at RM7.00 per share 15,000,000


04-01-1971 22,500,000 1.00* Rights Issue (1:1) at RM1.50 per share 45,000,000

06-05-1977 15,000,000 1.00 Capitalisation of Share Premium Account (Bonus Issue 1:3) 60,000,000






30-11-1985 68,249 1.00 Conversion of Unsecured Notes 270,068,249

15-11-1986 9,199,999 1.00 Issued in exchange for purchase of Kota Discount Berhad 279,268,248(Now known as Mayban Discount Berhad)


29-07-1987 to 90,000 1.00 Exercise of Employees’ Share Option Scheme (“ESOS”) 279,368,79820-10-1987


MENU


Date of No. of Ordinary Par Resultant Total IssuedAllotment Shares Allotted Value Consideration and Paid-Up Capital

RM RM’000



16-03-1989 to 9,198,206 1.00 Exchange for Kwong Yik Bank Berhad (“KYBB”) shares 316,527,71621-06-1989

11-07-1989 to 7,555,900 1.00 Exercise of Employees’ Share Option Scheme (“ESOS”) 324,083,61623-11-1989

30-11-1989 46,174,316 1.00 Conversion of Unsecured Notes 370,257,932


16-11-1990 187,383,416 1.00 Capitalisation of Share Premium (Bonus Issue 1:2) 562,150,248

27-11-1990 11,550 1.00 Exercise of Employees’ Share Option Scheme (“ESOS”) 562,161,798


03-01-1991 3,300 1.00 Exercise of Employees’ Share Option Scheme (“ESOS”) 562,445,595


04-01-1991 4,950 1.00 Rights Issue (1:2) upon ESOS at RM5.00 per share 751,441,547

25-01-1991 to 726,000 1.00 Exercise of Employees’ Share Option Scheme (“ESOS”) 752,167,54728-11-1991



30-11-1992 to 3,153,442 1.00 Conversion of Unsecured Notes 760,922,18630-11-1993

18-01-1994 380,461,093 1.00 Capitalisation of Share Premium Account (Bonus Issue 1:2) 1,141,383,279

29-12-1994 2,030,428 1.00 Conversion of Unsecured Notes 1,143,413,707

19-06-1998 1,143,413,707 1.00 Capitalisation of Share Premium and Retained Profit Account 2,286,827,414(Bonus Issue 1:1)

21-09-1998 to 72,909,000 1.00 Exercise of Employees’ Share Option Scheme (“ESOS”) 2,359,736,41409-10-2001

23-10-2001 1,179,868,307 1.00 Capitalisation of Retained Profit Account (Bonus Issue 1:2) 3,539,604,721

25-10-2001 to 60,567,200 1.00 Exercise of Employees’ Share Option Scheme (“ESOS”) 3,600,171,92105-08-2003

* The par value of the Bank’s shares was changed from RM5.00 to RM1.00 on 25 November 1968.

Changesin Share Capital

MENU

6

8

9

10

11

12

7

Maybank Share Price KLSE Composite Index

Maybank Share Price and Kuala Lumpur Composite Index

RM P

er S

hare

Inde

x Po

ints

July ’03 Aug ’03 Sep ’03 Oct ’03 Nov ’03 Dec ’03 Jan ’04 Feb ’04 Mar ’04 Apr ’04 May ’04 Jun ’04 July ’04

600

950

900

850

800

750

700

650

321

Mayb

ank 2004 A

nn

ual R

epo

rtMaybank

Share Price Review

The uptrend in domestic economic activities, high liquidity, accomodative monetary policy, smoothpolitical transition and a widespread global economic recovery provided a recipe for the strongperformance of the Bursa Malaysia. The Kuala Lumpur Composite Index rose from 693.58 on 1 July2003 to reach the peak of 908.96 on 22 March 2004. Although the index softened subsequently,it remained at a relatively high level, ranging from 781.05 to 901.85.

This performance was a perfect reflection of the movement in the Maybank share price. It trendedupward from RM8.47 per share on 1 July 2003 to hit the peak of RM11.60 on 22 March 2004.Until the end of the financial year, the price hovered between RM9.70 and RM11.60 per share.Hence, over the twelve-month period to 30 June 2004, Maybank share posted a gain of about19.2% – a full percentage point higher than the composite index.

MENU

PropertiesOwned by Maybank Group


No. of Properties Land Area Book ValueArea Freehold Leasehold (sq.m.) as at 30.06.2004

(RM)

Maybank

Kuala Lumpur 13 5 44,304.75 185,787,634.76Johor Darul Takzim 15 9 15,979.18 43,884,654.03Kedah Darul Aman 11 4 7,903.23 11,064,921.57Kelantan Darul Naim 1 6 2,846.00 2,442,630.22Melaka 1 5 3,648.77 6,052,285.79Negeri Sembilan Darul Khusus 8 3 17,492.00 6,941,838.77Pahang Darul Makmur 8 15 21,540.38 16,636,442.12Perak Darul Ridzuan 14 8 11,299.65 16,620,302.70Perlis Indera Kayangan 1 2 1,287.00 1,760,200.40Pulau Pinang 11 2 9,700.00 18,505,996.98Province Wellesley 5 1 2,737.00 5,605,713.86Sabah — 29 23,006.15 28,338,952.38Sarawak 3 15 11,879.80 14,311,613.25Selangor Darul Ehsan 20 13 111,161.04 110,586,568.53Terengganu Darul Iman 2 3 2,326.00 3,915,473.70Hong Kong — 2 193.00 HKD1,603,931.00London — 6 1,215.00 GBP599,512.56Singapore 11 11 27,063.00 S$109,802,346.74

Maybank International (L) Ltd

Wilayah Persekutuan Labuan 3 2 1,089.81 USD328,072.50

Mayban Finance Berhad

Kuala Lumpur 10 11 6,644.57 59,707,458.00Johor Darul Takzim 19 1 3,192.87 12,317,912.00Kedah Darul Aman 6 4 1,180.56 2,968,709.00Kelantan Darul Naim — 2 298.00 1,091,793.00Melaka 1 3 799.46 2,280,424.00Negeri Sembilan Darul Khusus 6 2 3,061.27 2,036,976.00Pahang Darul Makmur 3 4 890.98 2,175,297.00Perak Darul Ridzuan 10 — 1,298.20 2,681,531.00Perlis Indera Kayangan — 1 188.00 280,319.00Pulau Pinang 12 1 1,549.26 7,273,578.00Sabah — 8 1,335.59 5,428,313.00Sarawak 6 6 1,891.20 5,671,259.00Selangor Darul Ehsan 13 2 3,113.70 12,022,259.00Terengganu Darul Iman 6 — 2,986.00 1,842,071.00

MENU

323

Mayb

ank 2004 A

nn

ual R

epo

rt

No. of Properties Land Area Book ValueArea Freehold Leasehold (sq.m.) as at 30.06.2004

(RM)

Mayban Securities Sdn Bhd

Negeri Sembilan Darul Khusus 2 — 372.72 201,716.66Perak Darul Ridzuan — — 260.00 272,107.09

Mayban Life Assurance Berhad

Kuala Lumpur — 1 4,506.00 97,361,978.46Negeri Sembilan Darul Khusus 1 — 148.64 150,000.00

Mayban General Assurance Berhad

Kuala Lumpur 1 2 3,687.10 67,675,125.00Perlis Indera Kayangan — 1 130.00 163,970.00Pahang Darul Makmur 2 — 334.80 645,014.00Melaka 1 1 307.03 807,308.00Sabah — 1 186.00 806,015.95Sarawak 1 — 111.50 463,545.66Pulau Pinang 2 — 326.40 1,157,906.00Perak Darul Ridzuan 1 1 376.285 445,076.00Selangor Darul Ehsan — 2 429.12 1,087,817.00Johor Darul Takzim 1 — 125.4191 655,000.00Kedah Darul Aman 1 1 273.90 750,000.00Singapore — 1 638.00 S$543,312.00

Mayban Discount Berhad

Negeri Sembilan Darul Khusus 1 — 701.30 162,189.99Pahang Darul Makmur 1 — 102.91 184,031.62

Mayban PB Holdings

Kuala Lumpur 1 3 1,550.32 6,456,148.68Johor Darul Takzim 2 1 1,330.00 3,280,053.28Kedah Darul Aman 1 — 370.00 840,168.40Pahang Darul Makmur 1 2 595.42 1,255,399.58Perak Darul Ridzuan 1 1 857.74 2,845,273.29Pulau Pinang 1 — 445.93 970,750.39Sabah — 3 634.81 1,987,461.00Sarawak — 1 314.00 1,106,211.45Selangor Darul Ehsan 3 2 1,992.77 7,707,623.73

Aseambankers Malaysia Berhad

Negeri Sembilan Darul Khusus — 1 219.25 354,863.33Pahang Darul Makmur — 1 126.20 211,791.07Pulau Pinang 1 — 84.04 172,980.00

MENU

Formof Proxy for the 44th Annual General Meeting

Dated 20 September 2004.

Signature of Shareholder

NOTES:1. A member entitled to attend and vote at the 44th AGM is entitled to appoint a proxy to attend and, on a show of hands or on a poll, to vote

instead of him. A proxy shall be a member of the Company, an Advocate, an approved company Auditor or a person approved by theCompanies Commission of Malaysia.

2. Form of Proxy of a corporation shall be given under its Common Seal.3. Duly completed Form of Proxy must be deposited at 14th Floor, Menara Maybank, 100, Jalan Tun Perak, 50050 Kuala Lumpur, by 9 October 2004 at

11.30 a.m.4. For a Form of Proxy executed outside Malaysia, the signature must be attested by a Solicitor, Notary Public, Consul or Magistrate.5. For scripless shareholders, only members registered in the Record of Depositors on or before 12.30 p.m. on 6 October 2004 shall be eligible to attend

the AGM.

Number of Shares held

Telephone No.

No. Resolution For Against

1 Receive the Reports and Audited Accounts

2 Declaration of final dividend

3 Re-election of Tuan Haji Mohd Hashir bin Hj Abdullah

4 Re-election of Teh Soon Poh

5 Re-election of Dato’ Mohammed Hussein

6 Re-election of Datuk Megat Zaharuddin bin Megat Mohd Nor

7 Re-election of Md Agil bin Mohd Natt

8 Re-appointment of Dato’ Richard Ho Ung Hun

9 Re-appointment of Raja Tan Sri Muhammad Alias bin Raja Muhd. Ali

10 To approve the directors’ fees

11 Re-appointment of Messrs. Ernst & Young as Auditors

12 Authority under S132 D of the Companies Act, 1965 for the directors to issue shares

I/We (Full name in capital)

of (Full address)

being a member/members of Malayan Banking Berhad (3813-K), hereby appoint

(Full name in capital)

(Full address)

or failing him/her (Full name in capital)

of (Full address)

as my/our proxy to vote for me/us and on my/our behalf at the 44th Annual General Meeting of the Company to beheld at Nirwana Ballroom, Mutiara Hotel, Jalan Sultan Ismail, Kuala Lumpur on Monday, 11 October 2004 at 11.30 a.m.and at any adjournment thereof.

My/our proxy is to vote on the Resolutions as indicated by an “X” in the appropriate spaces below. If this form isreturned without any indication as to how the proxy shall vote, the proxy shall vote or abstain as he/she thinks fit.

CORPORATE SERVICES

MAYBANK14th Floor, Menara Maybank100, Jalan Tun Perak,50050 Kuala Lumpur,Malaysia.

STAMP

Documents

Annual Report 2004 2004... · 2005-09-29 · Annual Report 2004. 2004 Corporate ... Datuk Megat Zaharuddin bin Megat Mohd Nor; and Resolution 6 (ii) Md Agil bin Mohd Natt Resolution